By Jim Donnelly, Olson Global Markets

With technical extremes currently present on long-term charts, yields on U.S. 10-year Treasury notes (TNX) have likely tested their “lows” near the 1.44% level last month. For practical purposes, both key “channel” as well as “cross” trend line targets have already been reached with a bias toward higher yields now emerging. This bias, however, may not be fundamentally “in synch” with the Federal Reserve Bank’s recent policy of extending “operation twist”.

Nevertheless, evidence of a recovery in the real estate market appears to be mounting, if only at a very cautious pace. This is positive for domestic growth, and for the theme of rising rates. A dramatic recovery in the oil patch, precious and base metals as well as a jump in grain prices s on Friday, may have also signaled the end to the recent decline in commodity prices. A shift away from a posture of austerity toward a period of monetary stimulus in the Euro Zone might also boost hopes for an economic turn-around in Europe, which in theory could push rates upward.

With near-ubiquitous skepticism that Euro Zone leaders can actually find a sustainable path to an economic turn-around however, U.S. Treasury 10-year notes may remain a “safe haven” destination for international investors for quite a while.

Still, a move toward a possible test of key trend line resistance near the 2.50% level is technically possible on 10-year notes …as long as an unexpected event does not occur to change the current market psychology.

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