NFTRH; Long-term Interest Rate Status

This morning in pre-market the 10yr US Treasury Note it testing its breakdown at the blue dot on the chart.


And the 10yr yield is testing the top of its bullish pattern per the blue dot.


This test will have implications for only everything.

Functionally, if the pattern holds I’d expect the stock market to hold together but favor the items that benefit from inflation/rising yields. If it fails the market could easily rotate into a Goldilocks story, favoring the items that are more anti-yield (blue). A decline in yields would probably have to become impulsive amid some kind of risk ‘off’ flight for it to hurt the broad market.

yields and sectors

The recent rise in yields had obviously pressured the gold sector, and maybe a little yield relief here can get a bounce going. If so, it should be read as just a bounce for now.

It is FOMC week and the black boxes are probably tuned on a setting for maximum sensitivity to every news item that comes through (this morning it’s China worries). I am going to try to filter through the US interest rate view per the 10yr yield chart above.

At around 2.4% (+/-) yields are in breakout mode and targeting the 2.9% area of the limiter on the monthly chart. Between 2.3% and 2.4% is a mushy area where the breakout is in question. Below 2.3% the yield story, while not necessarily over, would be ‘back to the drawing board’, but also potentially indicating an investor lurch to risk ‘off’ behavior.