US 10-year treasury yield is on the retreat, nears key support at 2.77 percent

• Risk aversion triggers a flight to safety.
• Treasury yields drop, 10-yr needs to defend support at 2.77 percent.

The escalating US-China trade situation and the resulting risk aversion seem to have boosted demand for the safe haven treasuries.

Consequently, the yield on the benchmark 10-year treasury note has dropped more than three basis points to 2.79 percent and looks set to test the inverse head-and-shoulders neckline support (former resistance), currently seen at 2.77 percent. A convincing move below 2.77 percent will likely embolden bond bulls.

10-year yield weekly chart