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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
Comment: Correction: the recent outperformance of 10-year bonds suggests that longer term interest rates are falling behind shorter term interest rates.
Great chart - solid analysis
Reply
Hi Sir, thanks for the sharing!
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?
Reply
@exleywu, I had the same question.
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Many thanks Technician
Reply
@Ansari, welcome buddy
+1 Reply
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