It was reported that the recent $24 bln 10-yr note auction drew 2.046%, its highest since March 2012 and a weak 2.68x bid/cover (12 auction average 2.99x). The 10-yr note yield ended at their highest levels since the beginning of April, settling at 2.019%.
Since early 6 Dec 2012, the yield had been moving upwards towards its gap resistance of 2.030% - 2.170%. Facing a strong resistance level, it is possibe for a sideway range between 1.970% - 2.090% or a pullback to the gap support of 1.840% - 1.920%. A move below 1.800% will indicates the possibility of further downside of 1.600%. (Do note that bond yields rise when prices fall).
If US yield is a reasonable proxy for US equity markets, the pullback in yield may signal the pullback in equity. If one believes that the equity markets are overdue for a pullback, one may consider those ETF that either short equities / long treasury.
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