In NFTRH 704 we reviewed the shortest end, where the 2 year Treasury yield is nearing its decision point, whereby a continued rise in yields would indicate a bear market while a failure would keep a lower high in place for yields (bond bull intact). We also reviewed how the Fed Funds has finally caught up to the 3 month T-bill yield.
This morning 2 and 5yr Treasury bonds up positive (yields down) while the long bond continues to drive its yield up to a decision point of its own. Let’s again review the long bond’s yield AKA the Continuum chart.
Very simply, the 30yr yield (3.27%) is below its decision point (3.5%) after making a hysterical break of the traditional ‘limiters’ in tandem with the scariest inflation hysteria in recent and not so recent history.
If TYX takes out the November 2018 high I still would not rule out a potentially strong subsequent pullback in inflation hysteria (again, CPI on tap this week) and the yield. But it will have set a seed for a future trend change to ‘up’ and the beginnings of a bond bear market. Of course, the alternative could be a deflationary crash like what happened in 2008 and tried to happen in 2020 before the Fed took its steroids and printed markets out of trouble.
Bottom line: Both short-term (2yr) and long-term (30yr) yields are near but not above important ‘higher high’ decision points. If higher highs ensue, say hello to a new bond bear market (likely, even if yields then pull back on an interim basis). If not, the Continuum… continues (after the most hysterical test in its history).
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Perhaps another possibility is the Continuum acts as the support line on which the yield will drop before bounces higher than Nov 2018 ?
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