Mapping the Market: Treasury chart shows Trump has an opening to calm the bond market

An analysis of the chart shows that last month the yield made what traders call a "false break" above a long-term trendline — a line connecting the major peak from October 2023 with the 2025 yearly high from January of that year, one of several signals that indicated it could continue to ascend.

Benchmark Treasury yields have risen over the past three months as investors ​fret about the economic consequences of the Iran war, posing ​a challenge to President Donald Trump’s desire to keep ‌interest ​rates low. The behavior of yields in recent days following brittle peace talks, however, shows Trump might have an opportunity to push them back into a manageable range in the near future. The 10-year U.S. ‌Treasury yield is a closely watched benchmark, as it drives interest rates across the economy, from mortgage to corporate borrowing costs. It has been grinding higher in recent years as investors worried about the sustainability of rising U.S. debt levels. In recent months, Treasury yields rose as an oil shock due ‌to the Iran war led to fears about inflation. Since May 20, however, when Trump raised expectations of a deal to end hostilities, ‌Treasury yields have inched lower. An analysis of the chart shows that last month the yield made what traders call a "false break" above a long-term trendline — a line connecting the major peak from October 2023 with the 2025 yearly high from January of that year, one of several signals that indicated it could continue to ascend. A false ⁠break is when ​a market briefly pushes through an ⁠important level but then fails to hold there, often signaling a reversal. That is precisely what happened here, with the yield subsequently turning lower.

With yields now around 4.50%, according to ⁠LSEG data, the chart pattern suggests that if they were to make a sustainable break below last week's low of 4.426%, the most likely outcome would be ​a drift into the 3.9-4.6% range — territory that has been fairly familiar in the last year. A drop below the 3.85-3.90% area — ⁠near lows last seen in April 2025 — would be needed to open the door toward a more substantial fall, to the 3.60% area. Policymakers, however, would still have to contend with ⁠the longer-term ​trend, which still looks positive for yields; the monthly chart remains bullish. A push back above the 4.687-4.80% area would put the uptrend firmly back in play.

Along with Iran-related headlines, this week's U.S. jobs report adds another layer of uncertainty that could move yields in either ⁠direction. What the chart shows:

* False break above the long-term trendline connecting the October 2023 and 2025 highs, followed by a reversal lower * Key ⁠support at 4.426%; a sustained break ⁠below this level opens the door to a 3.9-4.6% trading range

* A recovery above 4.687–4.80% would be needed to resume the broader uptrend (Daily markets commentary from Reuters analysts on the signals financial charts are sending - and ‌what they might mean.)

(Christopher ‌Romano is a Reuters market analyst. The views expressed are his own; Editing ​by Burton Frierson and Matthew Lewis)