Friday, September 11, 2015

UST2Y 2-Year Treasury Yield Daily Chart Rising Wedge Versus Ascending Triangle; 2-Year Yield Hits 0.815% First Time in 4 Years

Just as there is a fine line between love and hate, there is a fine line between a rising wedge (red) and ascending triangle (green). The 2-year yield is lofty these days threatening to break out higher. At 0.75% and higher, the 2-year yield hints that a rate hike is on tap next Thursday, 9/17/15, when Fed Chair Yellen brings the tablets down from on high and tells global traders how to trade. A rate hike seems ridiculous considering the global deflationary environment. The Fed, through their obscene Keynesian policies that make themselves and their wealthy friends filthy rich (since they own large stock portfolios), has boxed itself into a corner. The Fed may trigger a recession by raising rates and if the do not, the global economy continues to fall into deflation and a recession likely occurs anyway and they will have no ammunition to fight the downturn.

The green ascending triangle is a bullish stock chart pattern. The vertical side is about 0.32% so a breakout from the triangle base line at 0.75% would target 1.07%. The red rising wedge pattern is a bearish stock chart pattern and the collapses from rising wedges can be quite dramatic.

The chart indicators favor the Treasury bulls (meaning note and bond prices would move higher and yields lower) since the red lines show negative divergence as yield bumps around at new highs. There is near-term momo as shown by the short green lines printing higher highs.

Of course when Yellen tells everyone the answer in 5 trading days, the yield may move radically up or down depending on if a rate hike is announced and the chart will build that news into the patterns after it occurs. Charts can only price in news up to the minute they cannot price in a major news event that has not yet occurred. If the rate hike drama was not occurring, the expectation would be for the 2-year yield to stagger sideways a few more days and then move lower to 0.60% for starters due to negative divergence. The near term long and strong momo with the short green lines needs to burn off first which creates a few more days of potential loftiness. The indicators on the weekly chart are negatively diverged favoring bond bulls (lower yields higher prices). 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 9:30 PM on Tuesday evening 9/15/15: The 2-year yield jumps higher today as the stock market rallies big (Treasuries are selling off with price lower yields higher). The 2-year yield hits 0.815% not seen since August 2011. The ascending triangle pattern is winning which would target 1.07%. China may be selling its US Treasuries sending yields higher.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.