Much has been said of the recent sharp rally in the yields of major bonds, this benchmark US 10-year Treasury note just one among many; some analysts were even so bold as to call an end to the 35-year trend to lower yields. We disagree and see the rally as a corrective bounce. From January's low at 1.65 per cent, a three-wave A, B, C-type formation retraced half of previous declines. This culminated last week with a dramatic shooting star candlestick against the Ichimoku cloud's lower edge - marking an interim high. The cloud should continue to push yields lower, back below the psychological 2 per cent and then on to 2012's record low at 1.4 per cent.
