JPMorgan-Global Fixed Income Technical Update The US 2s5s curve star...-110223588

Global Technical Analysis Research06 September 2024J P M O R G A Nwww.jpmorganmarkets.comTechnical StrategyJason Hunter AC(1-212) 270-0034jason.x.hunter@jpmorgan.comJ.P. Morgan Securities LLC•In the past three cycles, yield curve steepening really accelerated once the market-implied terminal easing rate pushed through the 50-80bp differential to the market-implied neutral rate (5y5y OIS rate). That spread is getting into that key inflection...•...We believe that behavioral dynamic reinforces our technically derived strategy to stop into a 2s/5s curve steepening trade on the breakout above the -19.5bp 2023-2024 base pattern highs. For now, we suggest keeping the stop below the -30/-30.5bp Aug low and 50-day moving average. We look to trail the stop higher once the curve extends further.•Also see technicals for US 2s, 5s, 10s, and 30s in this note, as well as the 5s/30s curve and 10-year TIPS breakevens in this note.•See Figures 10, 11, and 12 for 10-year Bunds, Gilts, and JGBs technical analysis.•Global FI Technical Trade Strategies:-5s/30s curve: Hold 100% steepening trade from 15.5bp average entry. Trail the stop to breakeven. Take profit on ½ of the trade near 58bp.-10-year TIPS breakevens: Hold 50% tightening trade entered near 215bp. Trail the stop to breakeven.-2s/5s curve: Stopped into 50% steepening position near -18.5bp. Use a -31bp initial stop (closing basis). -UK 10-year Gilt: Enter a 25% long at MKT. Use a 4.12% stop. See page 10 for analyst certification and important disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.Global Fixed Income Technical UpdateThe US 2s/5s curve starts to peak out from its two-year base pattern; 10-year Gilt bullish consolidation favors release to lower yields2Jason Hunter AC(1-212) 270-0034jason.x.hunter@jpmorgan.comGlobal Technical Analysis Research06 September 2024J P M O R G A NUSThe technically derived bullish duration and steepening outlook builds conviction as the front-end pressures key pattern resistance after the softer-than-expected payrolls report, and more yield curves start to release through their multi-quarter base pattern highs. We think front-end pricing has started to rally into key zones, where historical patterns suggest continued rallies can accelerate rapidly. To illustrate that dynamic, we created a spread chart that subtracts the market-implied terminal easing rate from the 5y5y OIS rate (Figure 1In the past thre cycles, yield curve stepening realy acelerated once the market-implied terminal easing range pushed through the 50-80bp diferential to the market-implied neutral rate (5y5y OIS rate).). In our view, it represents a very rough estimate of how far the Fed is expected to push the policy rate into