US: Gap remains open for 10-year note futures - BBH

The research team at BBH explains that the June 10-year note futures gapped lower to start the previous week, as risk-off positions unwound following the French election results and it is a small gap (125-27 to 125-29) which still remains open.  

Key Quotes

“Yet the market has not managed to push the contract below around 125-05.  The MACDs and Slow Stochastics point to downside risks, which is consistent with our expectation for stronger US economic data in the days ahead.  The five-day moving average is set to move below the 20-day for the first time in a month.  A break of 125-03 (38.2% retracement since the mid-March Fed hike) signals a move toward 124-20 and maybe 124-05.  That could put the 10-year yield back near 2.40%.”