30 Year Yield on a Key Test

A key test by one important indicator is taking place now. Back when we were gauging the potential for the reflation trades one aspect would have been for long-term yields to begin rising again out of the summer’s risk ‘off’ fear fest. Yields would travel upward along with investor sentiment out of the summer grind. Well, check.

The global macro reflation trades have bounced hard and the 30 year yield bounced from 1.9% to 2.4% before pulling back this month. If we used 2.2% as an important marker on the way up it’ll probably be one on the way down as well. Lose 2.2% and the reflation story weakens further. Our original goal was for a Q4 2019 bounce, possibly lasting into Q1 2020, after all.

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