Wednesday, October 15, 2014

TNX 10-Year Treasury Note Yield Daily Chart

Bond Guru Jeff Gundlach says 2.20% marks the bottom for the 10-year yield. Far be it for Keystone to question a guru but the chart says more malaise ahead. Actually, Gundlach's economic forecasts are very much in tune with many of Keystone's forecasts and his comments on markets are recommended reading. But the yields are likely heading sideways to sideways lower and this morning the bottom falls out with the 10-year now down to 2.16%.

The top occurs at the start of the year at 3% when the universal consensus said 4% was guaranteed in the weeks ahead as they sipped the holiday wine. Keystone said down is the direction based on the red rising wedges, overbot conditions (for yields) and negative divergence (red lines). It was a simple call and it is amazing that 95% of Wall Street and Chicago thought otherwise. It is not rocket science. Keystone was not invited to any of the Christmas parties but the top call in Treasuries proved prescient.

Yield stumbles down through the downward-sloping wedge. The gap from June 2013 is filled. Yield is at the lower trend line which is a logical area to bounce. The stochastics are oversold and positively diverged wanting an up in yields. The RSI just slips into oversold territory and the MACD line is headed lower so lower yields are expected after any bounce occurs. Note the ADX rising to 25 and perhaps higher which will signal that the trend lower is a strong trend lower that will be sustainable. At the least, yields will likely drift sideways for the next couple years disappointing the consensus on Wall Street that expects inflation yesterday. A move through 2.1%-2.4% is a reasonable expectation for the months ahead. At this writing at 7:52 AM, the 10-year yield is 2.16%.

The weekly chart is agreeable to a sideways to sideways lower vibe moving forward. The 2.15%-ish level is strong support on the weekly and daily charts and yield is currently testing this level. The 2.05% level is also strong support. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 8:56 AM: The 10-year yield falls to 2.057% collapsing from above 2.20% only about five hours ago.

Note Added 9:00 AM: 2.04%. The yield is falling like a stone. Down about 20 basis points in the last five hours. Hedge funds are melting down.

Note Added 10:04 AM: The 10-year yield collapses through 2% down to 1.868%!! Wow!! This is epic market history occurring in real-time. The 10-year yield recovers back above 2% now at 2.04%. Markets are moving extremely fast today.

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