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).
Perhaps another possibility is the Continuum acts as the support line on which the yield will drop before bounces higher than Nov 2018 ?