10 Year Treasury Yield Outlook -- On Target ~ Steve Blitz Morning Notes
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Friday, July 31, 2009

10 Year Treasury Yield Outlook -- On Target

Today's GDP data, including the revisions, widened the output gap and lowered the sites on growth in the recovery. The ten-year yield is consequently falling. The technical picture suggested as much and I wrote about it a few days back, and a few months ago as well -- an updated 60--minute chart is below. The low in yield comes about a year after the recession ends and this one should prove the same. The technicals point to lower yields and that is the trend until the technicals point in a different direction. Target yields are a break of 3.50%, a highly probable drop to 3.25% and ultimately revisiting sub-3.00% yields -- not necessarily on this run but at some point in the next 6 to 12 months.

From an investing standpoint, the short-term curves are too steep for what the Fed will most likely be doing. A 2-year Treasurys should offer an excellent total return over the coming 12-months. Remember, however, no promises implied and its your money and your decision.

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