TNX US 10-Year Treasury Note Yield Weekly Chart; Double-Top (M-Top); Negative Divergence; Tight Band Squeeze At Hand

The top is in for the US 10-year Treasury note yield 'on a weekly basis'. Whatchu talkin' 'bout, Willis? Everyone, even the Uber driver, says yields will continue higher. The 10-year weekly chart says otherwise as shown by the negative divergence (red lines). Yield runs higher but the indicators roll over and slope negatively diverging from the rising yield; neggie d. Yield is out of gas.

Yield is at the prior highs in June, or a hair away, and clearly all the indicators are lagging. The only caveat is the FOMC rate decision on 9/21/22, only 9 trading days away, since Chairman Powell's remarks can send markets wildly in one direction or the other. If yields pop on Powell's words, the weekly chart will likely set up the same but the top will be delayed by a week or three. The decision may also be a nothing-burger so the neggie d would kick yields lower on the weekly basis.

Yield is violating the upper standard deviation band so the door is open to a trip back to the middle band, which is also the 20-wk MA, at 29.73, or 2.97%. The lower band is also in play at 2.63%. Note the tight band squeeze (pink lines). A tight band squeeze tells you a big move is coming but it does not tell you direction. There was a tight band squeeze in 2021 resulting in a quick drop in yields that maintained the trend. It is a crap-shoot now with Powell on tap.

Yields are set up for a spankdown but the numbers can easily stall sideways for a few days waiting for Pope Jerome to bring the tablets down from On High. The ADX shows that the move higher in yields has lost its strong trend status below 26. Note how the yield is higher from 2021 to 2022 but the ADX moves lower. This tells you that the pop higher in yields is a weaker trend this year than when yields were moving higher last year.

The Aroon red line indicates that no one, nada, zero people, expect yields to come down ever again. Of course, it is a contrarian indicator so it will be interesting to see if a negative cross occurs for the Aroon going forward. In the past, yields usually top out in the first half of the year which also hints at flat to lower yields going forward. 

Interestingly, there was no reason for yield to come completely all the way back up to match the prior June highs because the indicators were fully negatively diverged then. It goes to show you that jaw-boning and messaging has kept yields propped-up over the last month.

If you bring up a daily chart, you can see that yield did not quite make it to a new high; it really should to lock-in the negative divergence. The MACD is a single hair higher over the last couple days so yield may want to float up to 3.35% over the next day or few. At that time, the daily and weekly charts will be set up with neggie d so yields will retreat, on the weekly basis, going forward unless Powell chooses otherwise.

The TNX daily chart has a H&S vibe to it so neckline at 2.7% and head at 3.5% is a 0.8%, or 80 basis points difference. Thus, if the 2.7% gives way, the 1.9% to 2.0% area would be in play as the downside target. There are big gaps to fill down there the one 2.01%-2.07% is big enough to drive a truck through it (charts typically return to fill gaps over time).

If you bring up a monthly chart, the indicators are neggie d except for the MACD. Yield is overbot and violating the upper band. Thus, the monthly chart is fully agreeable with the weekly chart that wants to see a multi-week down move in yield, however, the MACD on the monthly says another higher yield is on tap, higher than current levels, a few months out on the long-term basis.

What does all  that mumbo-jumbo mean? The 10-year Treasury yield is topping out now and over the coming days which will set up a multi-week down move in yield. Then, in October some time, maybe early November, the TNX weekly chart will set up with positive divergence to create a bottom and send yield higher again which will overtake the prior highs but a few months out, say as the year ends. At that time, it will be a long-term top in yields (for many months maybe a year or two) which will surprise Wall Street that expects higher yields from here forward.

The intense high inflation and hyperinflation, after we get through this year, will likely be on the back burner for a year or two after (2023, maybe 2024), and that is when the mess hits the fan with inflation and prices going through the roof. Americans will be praying they had the inflation now once they see the horror that is coming in 2024, 2025, 2026 with hyperinflation. Zimbabwe anyone?

Keystone is not playing with Treasuries right now but the ETF plays would be to sell TBT and go long TLT 'on the weekly basis' going forward. Remember, Chairman Powell will accelerate the move lower in yields, or, his remarks may provide yields some further life (buoyancy) that would also fade over a week or three of time with the weekly chart setting up with neggie d again. 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 10:47 AM EST: The 10-year yield pops to 3.33% about an hour ago then falls on its sword to 3.25% now at 3.27%.

Note Added Monday Morning, 9/12/22, at 8:00 AM EST: USD 108.07. Euro 1.0154. US 10-year yield 3.27%.

Note Added Tuesday Morning, 9/13/22, at 6:50 AM EST: USD 107.80. Euro 1.0174. US 10-year yield 3.32%. Inflation data hits in 1-1/2  hours.

Note Added Tuesday Morning, 9/13/22, at 8:39 AM EST: USD jumps higher to 109.01. Euro 1.0054. US 10-year yield 3.42%. Inflation data is hotter than expected. S&P futures were positive but collapse on the data down -1.8%.