10-Year bond has been outperforming shorter term 2-year note for the past few months(precisely since march 13). The candlestick graph represent the 10-year bonds/2-year notes
Bond price are the inverse of yield. So As the bonds rises, yields fall. So, the recent outperformance of 10-year bonds suggests that longer term interest rates are outperforming shorter term interest rates.
Under normal conditions, there is a a negative correlation between the U.S. dollar and the 10-yr bond/2-yr bond ratio. The chart shows this clearly, at least for the past year.
The red line is the inverse of USD index. I did draw the inverse so that chart will look clearer.
The recent rise in the ratio between these bonds has been accompanied with a drop in the U.S. dollar index, however, the ratio may have reached key resistance area near the falling trend line for the main bear trend. In addition to that, it has corrected 50-percent of the while bear trend.
If we look at the bigger picture, on the weekly chart the ratio is testing a previously broken long term rising trend lines.
That could be a warning that we might be - at least- at a near term top in the ratio, and accordingly, a bottom in the U.S. dollar.
My regards,
Technician
Bond price are the inverse of yield. So As the bonds rises, yields fall. So, the recent outperformance of 10-year bonds suggests that longer term interest rates are outperforming shorter term interest rates.
Under normal conditions, there is a a negative correlation between the U.S. dollar and the 10-yr bond/2-yr bond ratio. The chart shows this clearly, at least for the past year.
The red line is the inverse of USD index. I did draw the inverse so that chart will look clearer.
The recent rise in the ratio between these bonds has been accompanied with a drop in the U.S. dollar index, however, the ratio may have reached key resistance area near the falling trend line for the main bear trend. In addition to that, it has corrected 50-percent of the while bear trend.
If we look at the bigger picture, on the weekly chart the ratio is testing a previously broken long term rising trend lines.
That could be a warning that we might be - at least- at a near term top in the ratio, and accordingly, a bottom in the U.S. dollar.
My regards,
Technician
Comment:
Correction: the recent outperformance of 10-year bonds suggests that longer term interest rates are falling behind shorter term interest rates.
