TNX 10-Year Treasury Note Yield 2-Hour Chart; Oversold; Falling Wedge; Positive Divergence; Lower Band Violation

The 10-year yield dominates the water cooler discussions today. Global investors are seeking perceived safety in US Treasuries driving bond and note prices higher and yields lower. There is a worldwide move to notes and bonds leaving inflationists scratching their heads. The  lower yields provide a deflationary and disinflationary vibe.

A couple days ago, it was all systems go for higher yields. The note and bond rally needed to take a rest. The TNX 10-year yield 2-hour chart above was displaying possie d so it was time to launch. Yields popped but it was short-lived. There was no reason for yield to come back down in this 2-hour time frame chart but the MACD line was flattish in nature. That was possie d and helped to bounce yield but that may be one reason that yield leaked lower again but that would only be expected to create a matching low say at 2.40%-ish and bounce quickly again.

Instead, the bottom falls out of the 10-year yield down to 2.356% the lowest since 2017. The 10-year recovers to 2.37%. The only thing that can override universal positive, or negative, divergence is new unknown news. The further drop in yields comes as President Trump's new recommendation for a Federal Reserve seat, Stephen Moore, says the FOMC should cut by 50 basis points right now. Oh my. Moore is one of the architects of the tax cut that made the wealthy filthy rich and increased the national debt that recently blew through $23 trillion. For the last two years, Moore, who would have to be confirmed by the Senate before serving on the Fed, said the economy was great and growing--it looks like he does not believe that anymore. The central bankers are the market.

On that news, and with continuing global angst, and weak economic data, yields retreat today. As the chart shows above, however, up, up, up, would be the forecast for the 10-year for the hours and few days ahead. The overbot conditions, falling wedge pattern and universal possie d will bounce yield. The 10-year should at least seek the middle band at 2.44%, and dropping, for starters. The potential island reversal pattern remains in play if yield gaps back up through the blue gap.

The 10-year yield tagged 2.63% on 3/19/19 only a week ago and today dropped to 2.36% a jaw-dropping 27 basis point collapse in yield. That qualifies for water cooler status. The 3-month yield to 10-year yield spread remains inverted for four consecutive days. The recession is coming; it is only a matter of when. The average time that the recession arrives after the 3-mo-10 inversion is 14 to 15 months ; thus May 2020, about a year from now; spring 2020. However, there are longer periods and shorter periods when recessions occurred. The recession may be at our doorstep in the weeks and months ahead as everyone whistles past the graveyard drinking Fed wine, singing songs of praise for the ECB and touting the wisdom of the BOJ and PBOC.

Interest-rate sensitive stocks such as utilities, staples, REIT's and telecoms will likely underperform the broad stock market in the days ahead if the above chart plays out as expected and yields bounce. Keystone does not hold any positions currently in this note and bond arena, however, as per the above, TLT is a short right now, and TBT would be a long play right now, say for a few hours and days ahead. Stay nimble. Keystone will play one of these tomorrow. Yields may start to climb overnight. Keystone is short utilities as previously mentioned. 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 8:21 PM EST on Monday Evening, 4/1/19: Notes and bonds are sold off spiking yields higher as the positive divergence on the TNX chart forecasts. The 10-year yield pops to 2.50%. TLT drops from 126.50 to 124.20; -1.8%. TBT rallies from 32.15 to 33.30; +3.6%.