A look at US bonds ahead of the July FOMC rate decision

[Redator]

Markets have just received the data for both ADP Private Employment (104K vs 78K estimate) and the Annualized US GDP Data (3% vs 2.4% exp), with both showing strong signs for the largest Economy yet again.

Equity Markets have been moving choppy since the weekly gap at the open, and as the US Dollar is making fresh new highs, it is a good time to look at US Treasury Bonds.

These are not the most commonly traded asset class by Retail Traders but they still represent a gigantic volume of financial transactions daily, particularly US Treasuries.

Bonds have been struggling to find strong demand despite the June war-fears and the few bouts of flight-to-safety that markets have seen.

Between record deficits, an isolationist Trump Administration Policy, tariffs leading to much higher inflation expectations (bad for bonds) and a general rewiring of financial flows throughout 2025, Gold and the CHF really have been the standout performers in term of Safe-Havens at the cost of USTs.

Is there anything that could prop the bonds to rally despite the strong data which would on paper make it more interesting to invest in risk assets?

Read More: Microsoft (MSFT) Technical: Bullish trend remains intact above 20-day moving average

For those who don't know, bonds and their supply/demand move the yields that we see on TV: US 10Y Yield, it might also be common to see the US 30Y Yield with its relation to borrowing rates.
For a straightforward explanation, higher demand for bonds (bonds up) = Lower Yields (generally).

Let's take a look at the US Treasury curve and spot technical clues on US 10Y Bonds for future price action.

Taking a look at the US Yield Curve

US Treasuries Yield Curve, July 30, 2025 – Source: TradingView

On this chart above, we see the tenures for Yields of different bond durations.

The Purple line shows the 1-year ago, flattened yield curve from higher main policy rates leading to lower inflation expectations (hence lower longer duration yields)

The Red line shows the 1-month ago curve, with the same shape as the current one but with higher yields across.

The yield curve is currently steep as Markets price in lower rates in the upcoming 2 years, leading to higher long-term inflation expectations (even higher than before due to tariffs).

The pricing of interest Rate cuts tend to steepen the curve.

No cuts are expected for this meeting but there is still about 50 bps of cuts expected to the current 4.50% Main Policy Rate.

Comparative Performance for different Bond tenures

Bond Performances since March 2025 to today – Source: TradingView

As seen with this comparative performance chart, higher inflation expectations and deficits combined with a lower general trust for what was considered one of the safest hedge against risk has propped up longer-run bonds quite largely.

This is in part one of the reasons why Borrowing Rates are so high in the US (look at the 2 and 10 Year bond perf vs the 30Y).

That's another effect of the Trump Steepening effect, infamous among bond traders.

Technical Analysis for the most commonly traded US Treasury: The 10-Year Bond

Weekly Chart for the US 10Y Bond

US 10 Year Bond Weekly Chart, July 30, 2025 – Source: TradingView

Since the end of the hike cycle in July 2023, bonds have been stuck in rangebound trading.

Bond Markets have been in a unique phase after decades of lower yields and Quantitative Easing leading to Central Banks buying Bonds to lower yields further (similar to what the Bank of Japan has been doing since the end of the 1990s).

Particularly with the ongoing diversification from US Investments from actors like China for example (who used to be huge bidders for USTs), it is difficult to look at the past to spot similar conditions.

Anyhow, prices have been consolidating for almost 2 years in a 7 handle range (107.00 to 114.00 with a few fakeouts) and Participants are still looking to get a better view on the effect of inflation on tariffs.
Prices are just passing above the flat 50-Week MA – reactions here will be interesting.

Part of the reason why the FED is reluctant to cut rates is due to the ongoing strong US economy.
Any cut right now would lead to much higher expected inflation in the future and may bring up longer-run borrowing rates too much for the Economy to handle, despite lower short-term policy rates.

Daily Chart

US 10 Year Bond Daily Chart, July 30, 2025 – Source: TradingView

There is an ongoing triangle formation looking closer to the daily charts, with Bonds freshly rebounding on the lower trendline (supported by the 50 and 200-Day MAs).

However, the fun for Bonds was short-lived with this morning's Beat on US Data which brought some supply.

Looking at the RSI and the flat Moving Averages, the action is more neutral than anything, and it seems that markets have priced in the impact of tariffs – The rest will be to see if data comes in worse or better than the current pricing.

Spot the reactions as we approach to the top or bottom of the Triangle formation.

Support Levels:

• 50-Day MA 110.90
• 110.50 Lower bound of Triangle formation
• 109.00 to 110.00 Main Support

Resistance Levels:

• Mid-range Pivot acting as immediate resistance 111.50
• July 1st Highs 112.38
• Intermediate Resistance around 112.50
• 113.00 to 114.00 Main Resistance

4H Chart for the 10Y Bond

US 10 Year Bond 4H Chart, July 30, 2025 – Source: TradingView

We are seeing the establishment of a Pre-FOMC range between the 110.74 Lows and the 111.42 Highs – These will be the levels to watch for relative bull/bear strength as volatile trading after the rate decision may easily test these boundaries and potentially break them.

The rest is to see if we break higher or lower, depending on the communication regarding future cuts.


Safe Trades and good luck for the upcoming FED Meeting!

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