The band of 10y US T-Note yield.

Short Comment

I am suggesting that the appropriate band of the 10year US treasury during first half of this year should be between 2.4% and 2.8%. I thought the bullish momentum for the Note should be temporary, a month ago, but that was wrong.

My main reason for the thought was bullish stock markets. The stock markets are recovering its plunge of fourth quarter, last year, S&P500 got closed to 2,600 already.

However, there has been huge volatility and it will be continued. The volatility is the best friend of the safe assets. I think that the recovery of global stock markets will be continued and  S&P500 could touch 2,800 in March.

The recovery and the volatility will be not limited to the stock markets. The bond markets will be in huge fluctuation too, but overall direction should be in bullish.

Good news for the bonds are not just the volatilty. Central banks including US Federal Reserve, Chinese PBC and other small banks like BOK will keep their dovish stance. Even though ECB stopped buying regional government securities, there will be large amount of reinvestment from revenues of interest and principal in ECB's balance sheet. Considering sluggish European real economic situation, ECB should be in dovish stance for coming year too. Some analysts are suggesting that ECB could re-start their bond-buying programme because regional economic indices are too disappointing.

The Fed pronounced that the institution will decrease its balace sheet, but it is not a new story and the scale of the balace sheet will be more than $3.5trillion for so long time. The party of liquidity did not end yet. We would see that the yield of 10y US T-Note goes below 2%, late this year.