That hasn't happened for a long time.Hi.
Of course there will be some sort of technical rollback soon, it will take a year or so.
But, most importantly there is a super bullish quick signal for The 10-Year Treasury Yield.
It has happened now, this month, for the first time since 1986.
Obviously there is a long cycle of rising 10-year yields ahead of us.
Good article in Forbes from a month ago.
I recommend it to novice traders who want
to understand the impact of US10Y returns on the market.
Government bonds
US 10Y TREASURY: pricing Fed pivotingThere has been a lot of anxiety on the market whether the Fed will hike interest rates for one more time till the end of this year, as Fed Chair Powell mentioned a few months ago. However after the inflation data were officially released during the previous week, the market is currently almost quite sure that the Fed will not further increase its interest rates. Now the attention is switched to the question when the Fed will start to cut interest rates. Although Treasury yields expressed some volatility during the previous week, still, as of the end of the week they returned to the previous levels.
For the second week in a row, the 10Y Treasury yields were moving between levels of 4.67% down to 4.43%. Testing the potential for higher grounds showed that there is no market potential for such a move. Charts are suggesting that a short support level of 4.4% needs to be tested in the coming days in order for 10Y yields to find a new ground. A short move toward the up side is possible, however, not highly above the 4.5%.
US10Y pop, then lowerThis is fairly clear wave count. Each retracement took about the same amount of time. It appears we are completing the end of the 5th wave(estimated blue path)
Although right below the current price, we "can" say 5 waves are complete.
In the green rectangle is a fair value gap. I'm assuming price will pass through this area toward 4.34%
4.34% is the .786 fib of wave 3 fib retracement and my estimate where price corrects higher.
US 10Y yield approaching decent supportThe US 10Y yield is approaching decent support around 4.36/35 (August high, support line and Fibo) and the daily RSI is low (it does not normally maintain a move below 30) and this suggests that the market should hold this vicinity and attempt to recover.
It is helpful to use the daily RSI in conjunction with a target zone to add weight to an idea that the market is more or less likely to hold in this zone.
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US yields looking "toppy"; more weakness after rallyThe US CPI came down more than expected yesterday at 3.2% y/y, and as a result the USD fell sharply with US yeilds, while stocks and metals are on the rise. For now, this seems to be a very important data as it causes also a very important breakdown on USD index and US yeilds.
Looking at the US yeilds, we have five waves down, so it means that top is in place, and suggests that speculators believe that FED is done with hiking. But road map to lower yields/higher bonds will be a bit "bumpy", so be aware of some rally, especially if we consider five waves down on 10 year US yields. So A-B-C rally can cause some pullbacks on XXX/Dollar pairs, which will eventually see more upside after pullbacks.
Grega
US 10 Years Bond Yield 233 years old chart since 1790. 14/Nov/23US 10 years treasuries yields long term chart since 1790 is forming an expanding flat pattern ABC (Red), where it probably just completed wave II ( Blue Circled) = the first pullback of long term downtrend impulsive C wave ( Red )( further detail in next lower time frame chart ).
US 10Y TREASURY: no more rate hikes?Fed Chair Powell's speech in front of the IMF audience in Washington had some impact on the Treasury yields, but it seems that the market is still not ready to take another rate hike for granted. Namely, Powell`s hawkish tone on a possibility of another rate hike if the inflation โreaccelerate'' had an short impact on 2Y Treasuries which moved back to 5%, but the 10Y Treasuries remained relatively flat, which provided some market confidence that the Fed is finished with further increases of interest rates. It is also worth mentioning that the US 30-year bond auction was held during the previous week with the lowest demand within the last two years.
The 10Y Treasury yields were moving relatively flat during the previous week, ranging from 4.6% down to 4.48%. Still, they are finishing the week at 4.65%. Charts are pointing to a probability for 4.8% to be tested for one more time. However, a move back toward the 5% yield, is highly unlikely at this moment. On the opposite side, the next support line stands at 4.4%, which is also pending testing in the weeks to come.
Another Inverted Yield Curve with Even More Predictive PowerThe Federal Reserve Chair Jerome Powell spoke again today at a Brookings Institution event. His comments sparked a rally in markets (likely including short covering) that pushed the S&P 500 SP:SPX up about 122 points, or 3.10%, to close at 4080. The Nasdaq 100 NASDAQ:NDX rose 4.58% on the day, closing at 12,030.
But the bond market is sending less sanguine signals. The 10Y/3M yield curve inverted further today. Its inversion is currently the deepest since the slightly deeper inversion of this segment of the yield curve in 2000-2001 inversion, which had presaged the 2-year bear market from 2000-2002.
The 10Y/3M curve has been researched more than the more widely known 10Y/2Y curve (also known as the 10s/2s). Experts say inversions of the 10Y/3M serve as better predictors of recession than the 10Y/2Y curve.
The yield curve has remained inverted for over a month now. This qualifies as a "persistent inversion" that creates a recession signal. But the recession does not always follow immediately. According to Jim Bianco of Bianco Research LLC, "The average lead time" until the recession arises "is 311 days, or about 10 months."
What does this offer for traders then? On days when equity markets are rallying like there is no tomorrow, it tells us that markets are not out of the woods despite the buying frenzy. It means that a recession is more probable than not in the next year. But it doesn't tell us much about where prices are headed in the near term (technical analysis of price itself works better for this purpose). Just because a recession will likely begin in the coming weeks or months does not necessitate that equity markets plummet in a straight line to the ideal target. Many, including this author, wishes it could be as straightforward and predictable.
So traders should also keep in mind that inverted curves are not a trading signal. They are part of the broader economic and rate-policy context within which equity markets operate. It helps me to know that markets are not likely to resume a long-term uptrend until the recession has ended.
The bond market tends to sniff out the problems in the economy long before other markets. And equity markets can ride on hope and desperation for much longer than anyone expectsโjust as this unexpected bear rally carried SPX price from the October 13, 2022 low all the way back above the 200-day MA today and higher to close at 4080.11.
Below is a chart of the 10Y/2Y yield curve, which is also inverted.
Supplementary Chart A:
To compare the current 10Y/2Y inversion with some historic inversions, consider reading this prior post from July 2022 on the 2s / 10s yield curve inversion, and be sure to hit the refresh button to see the most recent months of data. The Wall Street Journal Confirmed in recent days, by the way, that the 2s / 10s curve
Supplementary Chart B:
Finally, on a monthly chart, one can easily see that the 2s / 10s curve inversion is the deepest one on recordโat least as far back as the chart allows. Hat tip to @SPY_Master for pointing this record-breaking inversion recently.
Supplementary Chart C:
High Yield to Stay, Why?This video tutorial, we will learn the difference between:
โข Interest rates and yield
โข Healthy yield curve and an inverted one and
โข The risks and opportunities with a prolong inverted yield curve (since March 2022)
Micro Treasury Yields & Its Minimum Fluctuation
Micro 2-Year Yield Futures
Ticker: 2YY
0.001 Index points (1/10th basis point per annum) = $1.00
Micro 5-Year Yield Futures
Ticker: 5YY
0.001 Index points (1/10th basis point per annum) = $1.00
Micro 10-Year Yield Futures
Ticker: 10Y
0.001 Index points (1/10th basis point per annum) = $1.00
Micro 30-Year Yield Futures
Ticker: 30Y
0.01 Index points (1/10th basis point per annum) = $1.00
Disclaimer:
โข What presented here is not a recommendation, please consult your licensed broker.
โข Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.
CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
US10Y ~ Intraday Analysis (2H Chart)TVC:US10Y intraday mapping/analysis.
US yields dip while bonds & stocks rip.
US10Y in clear downtrend with potential bearish H&S pattern developing, TBC.
H&S development would correlate with bonds/stocks pullback before further bullish momentum into EOY.
Left shoulder, head & neckline outlined. Right shoulder parameters:
Rally above ascending 1st trend-line (green dashed)
Resistance at 200SMA, gap fill, 2nd ascending trend-line (green dashed) + upper range of descending parallel channel (white)
Price action rolls over to re-test/break neckline & validate pattern
Prelim target = lower range of ascending parallel channel (light blue) + 50% Fib confluence zone.
Note: break of "neckline" before right should formation negates H&S = express trip to prelim target.
US10Y Extremely overbought on Bearish Divergence. Sell longterm?The U.S. Government Bonds 10YR Yield (US10Y) is having the first red month (1M) after rising non-stop since May. It has been on extremely overbought levels for the last 12 months as the price established itself above the multi-decade Bearish Megaphone pattern, the same way it was oversold below it following the March 2020 COVID crash. As you know the price quickly corrected back inside the Bearish Megaphone in a pure technical harmonization process of the extreme levels.
Technically it should follow a similar reversal now again, as the most important technical development of the year is October's Lower Highs formation on the 1M RSI. This is a huge Bearish Divergence as the price during the same period is trading on Higher Highs. The same kind of Bearish Divergence has only been spotted another two times in the last +40 years. On both occasions, an aggressive decline started. As a result it is only natural to expect a 1M MA50 (blue trend-line) test before 2024 is over, which right now is a huge early sell signal.
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Relationship between US 10yr yield & the DXYAs traders look for signals on potential moves in the FX market, a frequent question I receive is regarding the relationship between the 10yr yield and the DXY.
US 10-Year Treasury Yield:
The US 10-year Treasury yield represents the interest rate on the 10-year government bonds issued by the United States.
It is considered a benchmark for long-term interest rates and is often used as a reference for borrowing costs across the economy.
This yield is influenced by various factors, including inflation expectations, economic growth, and monetary policy.
US Dollar Index (DXY):
The US Dollar Index, or DXY, measures the value of the US dollar against a basket of major foreign currencies, including the euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc.
It provides a snapshot of the US dollar's strength or weakness relative to these currencies.
Relationship of US 10yr yield & DXY
The US 10-year yield and the DXY have a relatively strong positive relationship.
Increases in the yield on 10-year Treasuries have the tendency to draw capital into the US bond market because investors find US government bonds more attractive with higher yields.
Because of the increasing demand for the US dollar to buy these bonds, the dollar gains strength leading to a rise in the DXY.
As with any relationship between financial instruments, it is seldom 100% positively correlated given that there are a variety of factors, including inflation expectations, economic growth conditions, market sentiment, and central bank monetary policy.