How High Can Yields Fly?
Borrowing costs are back in focus after Jerome Powell & Co. made some hawkish revisions to next year’s Dot Plot. How high might they go? Today we’ll ponder that question using a long-term monthly chart of the 10-year U.S. Treasury note’s yield.
The first pattern is the falling trendline that began way back in 1985. TNX ripped through that level 17 months ago, ending a generational decline in U.S. rates.
Next, the move broke the pre-pandemic peak around 3.25. Notice how yields came down to test and hold that level between March and May. So, an old high becomes a new low. Does that confirm a directional change?
Third, TNX hit 4.33 last October. That was almost exactly the same level where it peaked in June 2008 as the subprime meltdown took shape. Above that level, the next apparent resistance would be the June 2007 high of 5.32. Depending on how things go, traders may look all the way up toward the May 2001 high around 5.53.
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Important Information
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
The first pattern is the falling trendline that began way back in 1985. TNX ripped through that level 17 months ago, ending a generational decline in U.S. rates.
Next, the move broke the pre-pandemic peak around 3.25. Notice how yields came down to test and hold that level between March and May. So, an old high becomes a new low. Does that confirm a directional change?
Third, TNX hit 4.33 last October. That was almost exactly the same level where it peaked in June 2008 as the subprime meltdown took shape. Above that level, the next apparent resistance would be the June 2007 high of 5.32. Depending on how things go, traders may look all the way up toward the May 2001 high around 5.53.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.