Wednesday, May 27, 2009
Ten-Year Treasury Yields -- Back To 2.5% Before Year End
Here is a quick look at the bond market sell off (yields rise / prices fall) that has been the trend since the year began. Without getting too deep into the technicals, the yield rally has about run out of steam. Before the year is out it would not surprise me to see 10-year yields trading around 2.5%. Now I know that runs counter to the fundamental information that is in front of us, but more often than not the fundamentals eventually validate the technical outlook. Just to underscore the technical view, here is a longer-term weekly chart --
Bottom line, and there are a lot more techincal indicators I could confuse you with, but it is way too soon to call an end to the bond market rally that began in 1982. Do I believe the long rally is coming to an end? Absolutely yes but it is best to recognize when market is in a counter trend move and not get too far ahead of the technical picture. In other words, let's get technical confirmation of a long-term trend change in yields before betting most of the ranch on a rush to higher bond yields.