UST10Y US 10-Year Treasury Note Yield Weekly Chart

Treasury yields were on their way to bottoming out ending the three-decade rally in notes and bonds, and then the bottom truly did fall out with yields plummeting to record lows during the February-March stock market crash (stocks sold off and much of that cash went into the bond market sending note and bond prices higher, yields lower). Yields bounce around this year moving sideways and take another dipsy-doodle in early August.

That is when the positive divergence formed (blue lines). There was a lower low in yield but the chart indicators were all sloping upwards; possie d. Yield is on the launch pad ready to move higher and voila, yields move higher receiving the possie d fuel. The indicators are long and strong, sans the histo, and soon, a day or two or within the week the stochastics. These two will help create a pullback on the weekly basis but the long and strong indicators will want to see another higher high in yields, on the weekly basis, going forward, after any pullback.

Yield gapped higher so at some time that gap will need filled. Note that a gap remains down at 0.58%-ish. Yields may drop in a sharp pullback in the stock market and tag that gap but it may occur super quick. Both the weekly and monthly charts are agreeable to upside ahead which means it is very likely that the multi-decade bull is over.

The upper standard deviation band is in play at 0.83% (pink) then the yield resistance at 0.91%-0.94%. The 50-day MA is coming down from 1.06% so perhaps the 0.90%'s targets are hit when the 50-day MA comes down to form a confluence say a couple weeks out. There is a gap-fill and some yield resistance at the 1.11%-ish area.

Treasury yields are; 2-year yield 0.15%, 5-year 0.34%, 10-year 0.77%, 30-year 1.58%. The 2-10 spread is 62 bips. 

Going forward, note and bond yields would be expected to rise. The chart above is the same across all durations; 2's, 5's, 10's and 30's.

If the stock market collapses, you will get the natural flight to safety with traders and investors buying Treasuries. If this occurs the 0.58%-ish gap fill may occur but it will likely be fast. Investors will likely be surprised that during the stock market selloff, the yields do not fall off as much as expected. People will likely hoard the cash instead of investing in notes and bonds. If yield comes down again you want to be a seller at that 0.58% to 0.63% area; that would be a primo entry area, however, considering the weekly and monthly charts showing that yields should move higher going forward, selling Treasuries from here forward would be the overall intermediate and longer term trades.

The TBT ETF chart is the same as the 10-year yield chart above, thus a TBT long play is in order, either being nimble moving in and out in the near-term according to the hourly and daily charts, or, simply buying TBT and holding since yields are likely headed higher here on out. It may not be a fast money maker, but TBT is likely a good place to park money for a while if that is a goal. The TLT ETF is the inverse of TBT. Thus, TBT moves up when Treasuries are sold off (note and bond prices moving lower, yields higher) but moves down when Treasuries are bot (prices up, yields down) in times such as a stock market selloff (like the last hour of trading on Friday). TBT moves in the same direction as yields.

TLT moves in the direction of note and bond prices, inversely to yields, so as yields dropped lower and lower these past years, TLT moved higher and higher. In a stock market selloff, when people cash out and are looking for a place to put that money, some go to the Treasury markets to buy notes and bonds sending yields lower which sends TLT higher and TBT lower. The expected path for TBT is to move higher for the weeks and months ahead while TLT moves lower. The TBT daily chart is working on a two-leg bull flag; first leg is 14.4 to 16.3 which is 1.9 difference, the sideways to sideways lower consolidation occurs in September then the second leg begins at 15.3 so the target is 17.2. Price hit 16.6 yesterday and sits at 16.22 now so there is a point sitting on the table (about +6% if the target is hit). Keystone does not have any positions in this arena right now; there's lots of other juicy stuff to play in the equity markets. The 10-year yield is at 0.78%. 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 Thursday Morning, 10/8/20: SPX is at the 3443 palindrome Gold 1888. 10-year yield 0.777%. VIX 27.32. TBT 16.33. TLT 159.87. Euro 1.1742. US Dollar 93.76. DAX (Germany) +1.2%.