TNX 10-Year Treasury Yield Daily Chart Sideways Channel Bollinger Bands

The 10-year yield jumps wildly higher in recent days. Lots of talk about how the inflation genie may be out of the bottle and we are now witnessing the move up in yields moving forward, reversing the multi-decade bond preference. Looking back, however, a similar sharp move higher has occurred several times over the last few months.  The sideways channel thru 1.57%-1.84% is in play with yield now at the center point.  The yield violated the upper BB yesterday and note that each time this occurs, the yield typically retreats. The neon ovals highlight the tight BB squeeze that created strong violent moves; the tight BB's helped squeeze out the move higher over the last few days.

The triple top spank down occurred due to the negative divergence in October, then the bounce off the bottom in November was due to the positive divergence.  Note that the indicators are long and strong currently so after any pull back, yield wants to print higher highs again. The yield is 1.72%-1.73% this morning.  When the upper BB is violated a move typically occurs back to the middle BB, at a minimum, which is 1.634%. Also note the 200-day MA at 1.755% which provides overhead resistance. The 200-day MA sloping negatively is a continual bearish sign for yields, bullish for bond price. The yield stumbles sideways and this behavior may occur for months and years ahead, which would frustrate the inflationists that are looking for yields to explode higher here on out.  The yield moves with equities, thus, yield up = equities up = euro up = dollar down, and, yield down = equities down = euro down = dollar up.

Markets may be entering a new play zone since the last quantitative easing packages, QE 3 and QE4, have already failed, with the SPX below where these programs were announced.  However, Chairman Bernanke announced QE4 only two days ago so it is prudent to allow a few days for the markets to sort things out. The projection for the 10-year is a tough nut to crack but it appears a pull back will then lead to higher highs in yield, at which time the indicators must be studied to see if negative divergence forms, or not.  The upper BB violation encourages a move lower.   The 200-day MA provides resistance. Overall, the 10-year likely moves sideways for the next couple years as global deleveraging continues. 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.