The benchmark 10Y Treasury briefly topped 3.00%… and then faded back under failing to resolve the ongoing debate whether the breach of 3.00% will unleash a liquidation panic or, alternatively, a buying spree. Of course, the importance of 3% is more psychological than anything, and is merely a precursor to the real question that matters: where do yields go from here (a topic we discussed yesterday).

Or rather, the real question, is not where yields go from 3.00%, but from the real number that matters for the 10Y; recall as Citi’s technical team noted yesterday, the big level the team are watching is 3.05% – a technician’s wet dream and giant pivot point as it is both the January 2014 intraday high, the channel top as well as a passible neckline of a large double bottom.

This is shown in the chart below, where Citi does not mince words and simplifies the potential action by noting that since there is a huge resistance level above the 3.05%, “a break (on a monthly basis) could be HUUUGGGGE.”

That said, Citi – like Morgan Stanley, does not expect a selling panic even when the 10Y hits 3.05%; instead, its US rates strategists “don’t believe that yields are likely to run away to the upside at least until we get into or through the key events (ECB, ECI, PCE and refunding announcement) of the coming week or so.” Instead, recent price action seems to have been driven by short term positioning at the moment (see how the USD/EM bid on Monday has stalled today). Still, as Citi concedes , volatility is rising and this means that price action is going to continue being choppy.

Ironically, it’s other assets that are more affected by the touch of 3%: US equities are erasing earlier gains while CrossJPY keeps moving higher as the dollar rebounds to session highs; the EURJPY continues to march on, lending to a EURUSD bid to fresh session highs.