TNX 10-Year Treasury Note Yield Daily and Weekly Charts

The daily chart for the ten-year yield shows a sideways triangle in place poised to explode out one side or the other. Note the sharp moves that occur when the Bollinger Bands squeeze in tight. In mid-October the yield shot straight up from the tight BB's and now the BB's are actually tighter so a large move is at the doorstep. Obviously the presidential election will send the yield violently one way or the other.  The indicators for the daily chart are weak and bleak forecasting lower yields. The yield should move down to touch the lower BB as well which is at 1.632%.  The yield is now printing 1.70% this morning. The sideways channel thru 1.60-1.85% may be the future for the ten-year for months to come. The daily chart is hinting at a move to 1.55-1.65%.

On the weekly chart, the same characteristics are in place, the BB's are coming in tighter. The yield touched the upper BB so it ventured back to touch the middle BB but a move to the lower BB may be on tap. The lower BB may climb and meet a falling yield in the 1.5% area. The yield is drifitng sideways favoring the 1.60-1.85% channel. The projection is a move down towards 1.6% in the near term but of course the election can change things. If Obama wins, stocks may weaken which would send money into Treasuries so the note price would rise and the yield would fall which is what these charts hint at occurring. If Romney wins, the stock market would likely benefit short term, so money would leave Treasuries, so note price will drop and the ten-year yield would rise. Of course, if we take the election out of the equation and think about the current market weakness in place, the UPS indicator failing yesterday forecasting a Cyclical Bear Market now in place, the conclusion is that the markets may drop regardless moving foward which would correspond to the yield moving lower.

In general, as the equities markets move up, yield moves up. In disinflationary and deflationary scenarios, the equities markets drop and yields will move down as well. The TBT ETF is the same basic chart as the TNX.  TLT is the opposite of this analysis.  The TNX charts above show yield. The TBT is an ultrashort of the note price.  Remember, note price moves opposite to the yield.  Thus, if yields are moving higher, equities move higher, money is flowing from Treasuries into stocks, so the note price falls (yield up), so TLT would drift lower and TBT would move higher.  If yields are dropping, as the above charts suggest moving forward, money is flowing from stocks into bonds, the note prices are moving up (yield down), so TLT would move up and TBT down. Projection is for the 10-year to move towards 1.60% in the near term which would be coincidental with the equity markets selling off. 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 11/6/12 at 3:55 PM:  As the equity markets close, the 10-year yield is 1.75%, jumping higher today with the rally in equities.  Equities up means yields move up.  This move is testing the top rail of that sideways triangle, see if a spank down now occurs, or, a breakout higher.