A Massive Shift is at Hand

Treasury yields are bumping up against major resistance this morning. The 10-year note yield, in particular, is threatening a breakout above multi-year resistance in the 2.30%-2.40% yield range:



There are a few reasons why this recent surge in yields potentially holds more significance than a garden variety 25 basis point move:

  • It has occurred rapidly (4 trading sessions)
  • Summer 2012 is looking like a major long-term bottom in yields and the recent low (January) has the makings of the right shoulder of a large head & shoulders bottoming pattern (December 2008 being the left shoulder)
  • A shorter term multi-month H&S bottom would be triggered with a minimum target of 2.85% on the 10-year yield


Whatever you do don’t sleep on what’s going on across the bond market right now. A massive shift is at hand that could shape global financial markets for years to come…

Side Note: A large rise in bond yields has bearish implications for equity market sectors such as REITs (IYR), utilities (XLU), and home building related stocks (XHB) – we have already begun to see these sectors put in major tops and roll over.