Treasury bond yields are experiencing intense fluctuations once again, with a special focus on the 10-year Treasury yield.
Earlier this week, the 10-year Treasury yield surpassed a significant psychological barrier, reaching 5.02%, its highest level since mid-July 2007.
However, this milestone led to a surge in Treasury purchases, resulting in yields falling to 4.87% at the time of writing.
Among today’s buyers, one notable figure stands out – Bill Ackman, a trader who previously sold Treasury bonds consistently.
Bill Ackman made a daring move in early August by shorting long-term Treasury securities. His decision was based on the belief that growing deficits, increasing inflation, and rising geopolitical tensions would cause yields to rise.
The exact size of Ackman’s investment remains undisclosed, but so far, his position has been successful. Since making the bet, he has seen the iShares Treasury 20+ Year ETF (NASDAQ:TLT), a proxy for the long end of the Treasury yield curve, drop by approximately 12%.
On October 23, Ackman took to social media, specifically Elon Musk’s X platform, to announce his decision to cover his Treasury shorts. He stated that the reason behind his decision was that “the economy is slowing faster than recent data suggests” and expressed concerns about the risk in the world at current long-term rates.
While it is too early to determine if there is a trend reversal in the Treasury bond market, certain technical indicators suggest that the seller momentum may be weakening.
The Relative Strength Index (RSI) on the daily chart of the US Treasury 10 Year Note ETF (NYSE:UTEN) is showing an upward trend, moving out of the oversold zone. Interestingly, this divergence is happening despite the prices continuing to trend downwards, reaching new lows in recent sessions.
This bullish RSI divergence in the price of the 10-year Treasury bond may indicate the beginning of a new uptrend, but only time will confirm this.
