Top black line is the major resistance line. If yields break this, the US is majorly fucked and signals an end to "cheap money" at a time with debts and unfunded liabilities at all time highs.
Yellow line is the support line of the 37+ year channel going back to the early 1980s.
Red line is the more recent resistance line which began in June 2007 at the eve of the GFC.
The election of Trump provided the catalyst required to push yields above this resistance line. A year later, the 2017 tax cuts and more specifically, deficit spending provided the catalyst needed to push yields to firmly break out of this pattern and test the long term resistance.
Tax reform resulted in nearly year long sugar high in equities and rising interest rates for all.
Resistance proved too strong, for now.
What to expect going forward:
In any event, long term yield will likely only go lower. Yields breaching the long term black line, at a time of all time high debt, means much pain and could even lead to war, so will likely be avoided at all cost. The end game is zero and negative.
Currently, yields are resting more or less, exactly at the .786 fib support line; currently 2.85%. As support lines go, this one is pretty weak and won't need much of a catalyst to break and send yields lower to 2.52%
What could send yields back up to test 3.26?
An announcement of a trade deal and/or removal or decrease in tariffs could provide the catalyst needed to send yields back to 3.26 and possibly breach black line of death. This would be bad long term and any such deal will likely prove short lived. The US and China seem to be on an unstoppable path to eventual conflict/war.
More likely, no deal is reached and trade relations continue to deteriorate sending both equities and yields lower. Or, such a deal is short lived and fails.
10 year reaches 2.52% and from here has an opportunity to crash straight to 2.07% or bounce back to 2.80-2.85 before ultimately going down to 2.07% (and below) anyways. Sorry.
In short, no matter how one looks at it, yields are either going to continue their 37+ year trend LOWER or we're going to break that black line of death and then the US will REALLY begin to feel the (debt) squeeze.
RSI suggest we will eventually test that black resistance line, at some point in the future.
Yellow line is the support line of the 37+ year channel going back to the early 1980s.
Red line is the more recent resistance line which began in June 2007 at the eve of the GFC.
The election of Trump provided the catalyst required to push yields above this resistance line. A year later, the 2017 tax cuts and more specifically, deficit spending provided the catalyst needed to push yields to firmly break out of this pattern and test the long term resistance.
Tax reform resulted in nearly year long sugar high in equities and rising interest rates for all.
Resistance proved too strong, for now.
What to expect going forward:
In any event, long term yield will likely only go lower. Yields breaching the long term black line, at a time of all time high debt, means much pain and could even lead to war, so will likely be avoided at all cost. The end game is zero and negative.
Currently, yields are resting more or less, exactly at the .786 fib support line; currently 2.85%. As support lines go, this one is pretty weak and won't need much of a catalyst to break and send yields lower to 2.52%
What could send yields back up to test 3.26?
An announcement of a trade deal and/or removal or decrease in tariffs could provide the catalyst needed to send yields back to 3.26 and possibly breach black line of death. This would be bad long term and any such deal will likely prove short lived. The US and China seem to be on an unstoppable path to eventual conflict/war.
More likely, no deal is reached and trade relations continue to deteriorate sending both equities and yields lower. Or, such a deal is short lived and fails.
10 year reaches 2.52% and from here has an opportunity to crash straight to 2.07% or bounce back to 2.80-2.85 before ultimately going down to 2.07% (and below) anyways. Sorry.
In short, no matter how one looks at it, yields are either going to continue their 37+ year trend LOWER or we're going to break that black line of death and then the US will REALLY begin to feel the (debt) squeeze.
RSI suggest we will eventually test that black resistance line, at some point in the future.