The 10-year Treasury bond has been in a consistent downtrend since December that may be due for a pullback on technical weakness as market rallies pause. The gains seen in recent months has largely been the work of risk appetite returning as investors renew confidence in equity markets and flee the safety of treasuries. Despite the movement, the bond remains well above the average level seen in the previous year and remains at risk for renewed upside. The future is at the bottom of its downward channel and approaches congestion at 118-25, the 61.8% retracement of the move from 111-12 to 130-25. Possibly leading as a catalyst to a higher move are overextended gains seen in stocks and forex. The S&P500 has rallied 31.1% in less than three months time while the Euro, Pound, and others, appear weak on the technical front as well. Resurgence in the banking sector is largely priced in at this time and economic weakness, regardless of perceived strength from stimulus plans in 2010, are likely to weigh markets lower in the near-term.
