TYX 30-Year Treasury Bond Yield Weekly Chart; Potential Bull Flag

Here is some bond drama. The 30-year yield moved above the 3% level last week for the first time since last spring. The blue lines show a potential two-leg bull flag pattern. The first leg is the up in yield from 2.1% to 3.2% that is a 110 basis point rise. Then yield stumbles and bumbles through a sideways consolidation pattern with a slight downward bias. This is textbook behavior for a bull flag.

If yield fulfills the bull flag and the second leg continues higher from 2.65% it will target 3.75%. The late 2013 and early 2014 highs in yield are at 3.75%-4.00% which would be the target area should the bull flag play out for the weeks and months ahead this year.

The first test for yield is the purple line which is the highs from a year ago at 3.2%-ish. Those looking for inflation and higher rates will cheer if the 30-year travels above 3.2%. Note, however, that currently the red lines show that the indicators are nowhere near the prior highs from one year ago. If yield breaks out above 3.2%, those red lines become negative divergence and hamper any upside in yields.

The short green lines show long and strong strength in the VST time frame. This is carrying yield higher currently. The chart will have to be monitored going forward to see how it plays out from the inflation and deflation perspective. Keystone is expecting inflation to remain Godot. The 30-year yield will likely overtake the 3.20% level but will likely stall after that and travel through the year sideways. If the stock market sells off this year, people will be flocking into Treasuries which will keep yields low.

The forecast would be for a move to as high as 3.30% over the next month or two but then yields should relax lower again and likely travel through 2.7%-3.3% into the end of the year.

What sometimes happens with bull flags is it will peter out and keep moving sideways for a few more months but eventually does move higher towards the second leg target but perhaps the 3.75%-4.00% area is something more on tap for 2019. It will be easier to tell more after a month or two occurs. 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.