Monday, November 24, 2014

TYX 30-Year Treasury Bond Yield Sideways Channels

The 30-year yield is moving sideways through a tight range like the 10-year yield and traders are awaiting the move out of the sideways channels to point the direction ahead. The TNX (10-year) wrestles through the 2.30%-2.38% and the lower 2.30% support is currently being tested. For the TYX chart above, the purple sideways range at 3.03%-3.09% has been in play for the 21 days. On Friday, the purple range failed and yield remains under the lower rail now at 3.01%. The purple range encompasses all the closing yields.

Broadening out with the black channel that encompasses nearly all intraday high and low yields a range through 3.01%-3.10% emerges and this is in play for the last 23 consecutive days. The 30-year yield is testing the lower 3.01% boundary right now. The 3.00% level is a psychological level. Thus, a failure here at 3.00%-3.01% will lead to a new lower range perhaps with initial support at 2.94%. Lower yields also indicate a further slippage into disinflation and deflation that the overwhelming consensus of traders say cannot occur moving forward.

A 30-year yield under 3%, with a flattening yield curve overall, indicates the ride to deflation town may not be as far away as everyone thinks. Of course the Fed and other central banker's have been printing money like madmen to prevent deflation thus, if the day of reckoning does arrive in the end, and deflation finally extracts its pound of flesh, it will prove that the Fed's grand Keynesian experiment, the brainchild of former Fed Chairman Bernanke and current Fed Chair Yellen, is a failure. 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 7:10 AM on Tuesday, 11/25/14: The 30-year yield sits at 3.00% making a bounce or die decision today.

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