BofA Merrill Lynch:Despite this morning’s bounce in US 10yr Treasury yields, we reiterate our bullish view. The completed, Head and Shoulders Top (in yield) points to further downside in the sessions and weeks ahead towards 1.949% (year-to-date channel base) and potentially below before greater signs of basing emerge. Bounces should be limited to 200d and head and shoulders neckline at 2.162%/2.188%. Supportive of this bullish Treasury view are constructive seasonality and the ongoing correction in the S&P500. With the VXV/VIX ratio indicating growing investor anxiety, we look for the S&P500 to test its 100d average (now 2080) before greater signs of a base can emerge.
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