Treasury Yield Overselling Suggests Potential Rebound Ahead of Jobs Report

The yield on the 10-year Treasury Note is showing signs of overselling, according to technical analysis. The chart indicates that this level of overselling is unprecedented compared to previous times when the Federal Reserve raised interest rates from 0% to 5%. This has led some analysts to speculate that the market may be due for a rebound.

The yield on the 10-year Treasury Note has jumped significantly over the past two weeks, increasing by 29 basis points in just eight trading days. This sudden spike in yields has caused concerns about inflation and interest rates, leading to a decline in bond prices. The expected nonfarm payroll report for September is anticipated to show around 90,000 to 100,000 net new jobs created.

The market's reaction to the August inflation rate, which fell to +0.2%, was muted, with Treasuries failing to benefit from the lower inflation reading. The strong dollar and high oil prices are also weighing on the Treasury market. Analysts are waiting for a stronger rebound in Treasuries, but anything lighter-than-expected in the nonfarm payroll report could potentially trigger a rally.