Friday, December 16, 2016

TNX 10-Year Treasury Note Yield Daily Chart; Overbot Yields; Rising Wedge; Negative Divergence

The 10-year yield is worth a look as the charts price in the Fed announcement this week. The negative divergence with the indicators (blue lines) remains in place after the Fed increases the likelihood of rate hikes in 2017 from 2 hikes to 3 hikes. Yield launched higher above the upper standard deviation line (pink). Note that yield has violated the upper band a lot since the election but has not yet made it back to the middle band as it should. Yield desperately needs to mean revert back towards 2.39%, which is also the 20-day MA, and rising.

There is a small amount of yield momentum in the very near term so yield may jog sideways for a couple days down, then back up, then yields roll over to the downside in this daily time frame.

The brown circle is the Brexit vote. That is where yields began the move higher. The blue circle is the US presidential election where Donald Trump emerged victorious. Stocks actually began rallying the day before the election. Notes and bonds sold off causing the spike in yields. The neon blue circle is the ECB promising, and providing, more QE. The central bankers are the market. Generally, money is fleeing notes and bonds and running into the stock market as everyone is worried they will miss the rally of the century under King Trump's rule.

So the daily chart wants a pull back in TNX, yield should retreat perhaps to that 2.30%-2.45% area to take a rest, say, over the next month. The TNX weekly chart, however, remains long and strong with its indicators except for the stochastics that are overbot and neggie d. Thus, the stoch's on the weekly chart conspire with the indicators on the daily chart above to push yields lower in the coming week or three. At that point, yields should recover and eke out further higher highs in yield on the weekly basis, say, in mid to late January. Generally, yields will likely move sideways through next year disappointing those that expect a runaway move in yields to the upside for the weeks and months ahead. Wage inflation is not occurring in the states so inflation will not exist. 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 Saturday, 12/17/16: TNX is at 2.60%. The high yield last week was 2.62% and the low yield was at 2.42%.

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