I posted a while back that the "rising rate" mantra may not be as sure as most think.
To recap my view in brevity: Rates are up against a multi-decade long falling trend line, so it'll take more than a few sessions or weeks to overcome. I do believe that rates will be higher if you're looking out years or even decades, but shorter- to intermediate- term, the technical picture suggests rates are more likely to fall than rise.
This chart has a lot going on, so let me explain. First, we appear to have formed a head and shoulders top, and Friday's close was essentially right on the neckline. If that neckline gets broken, the downside target for TNX is at 23.19 (2.319%). That level nestles in comfortably between the 61.8% and 78.6% retracement levels of the swing from the lows in September to the highs this year.
Furthermore, there are two breakouts that remain untested. The first, or the "major" one, is around 26.00 (light red shaded area is the range). The second, or the "minor" one, lies just south of 25.00 (orange shaded area is range) and aligns with the aforementioned 61.8% retracement.
Also worth pointing out is the bearish divergence in the RSI's trend (white line) marked with the yellow circle. The MACD also confirms this trajectory lower (the other yellow circle).
In short, it looks like rates are headed back to 26.00 at a minimum, or more likely even further to the confluence of levels between 22.50-25.00.
Rising rate environment? Sure doesn't look that way to me...
(PS - I marked this as "short" because of the inverse relationship of bond prices and yields. So I'm bullish on bond prices, bearish on bond yields.)
To recap my view in brevity: Rates are up against a multi-decade long falling trend line, so it'll take more than a few sessions or weeks to overcome. I do believe that rates will be higher if you're looking out years or even decades, but shorter- to intermediate- term, the technical picture suggests rates are more likely to fall than rise.
This chart has a lot going on, so let me explain. First, we appear to have formed a head and shoulders top, and Friday's close was essentially right on the neckline. If that neckline gets broken, the downside target for TNX is at 23.19 (2.319%). That level nestles in comfortably between the 61.8% and 78.6% retracement levels of the swing from the lows in September to the highs this year.
Furthermore, there are two breakouts that remain untested. The first, or the "major" one, is around 26.00 (light red shaded area is the range). The second, or the "minor" one, lies just south of 25.00 (orange shaded area is range) and aligns with the aforementioned 61.8% retracement.
Also worth pointing out is the bearish divergence in the RSI's trend (white line) marked with the yellow circle. The MACD also confirms this trajectory lower (the other yellow circle).
In short, it looks like rates are headed back to 26.00 at a minimum, or more likely even further to the confluence of levels between 22.50-25.00.
Rising rate environment? Sure doesn't look that way to me...
(PS - I marked this as "short" because of the inverse relationship of bond prices and yields. So I'm bullish on bond prices, bearish on bond yields.)