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 near the falling 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 .
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.
I have one question as regarding to the statement of "the recent outperformance of 10-year bonds suggests that longer term interest rates are outperforming shorter term interest rates."..
In my understanding, if 10-year bonds price is outperforming the 2-year bonds price, does it imply that the longer term interest rate will eventually fall comparing with the shorter term interest rate?