UST10Y 10-Year Treasury Note Yield Weekly and Monthly Charts; 10-Year Yield Placing Long-Term Top

Yields are a big story over the last couple weeks. You can see the big jut higher in the UST10Y (TNX) yield on the weekly chart above. Everybody and his brother from a different mother say yields will continue higher forever. JP Morgan CEO Dimon, while looking around for a grandmother to fleece, proclaims 7% ahead for the 10-year yield. What is he smoking?

The long-term monthly chart is cooked in full negative divergence. There is no more juice available on the monthly basis to take the 10-year yield higher. The RSI and stochastics are overbot agreeable to a pullback in yield. The red rising wedge pattern is bearish for yields.

The Aroon green line on the monthly chart are the investors expecting higher rates forever and they are all patting each other on the back in 100% agreement that yields will go up forever. Likewise, the Aroon red line representing the traders that want yields to pull back agree 100% that yields will go up forever. No matter who you are or what you think about the direction of yields forward, everyone, 100%, agree that the 10-year yield will rise for months and months into the future. They are all wrong. The Aroon is a contrarian signal.

It is common sense that when the boat is fully loaded to one side, in this case every single person expecting higher yields for months and months forward, these folks are typically wrong. The monthly chart is nasty. Of course there may be fits and starts but those expecting the 10-year to catapult far above 5% will be disappointed.

Watch the MACD line on the monthly chart for this month. If October finishes with the neggie d in place, the top is in on the monthly basis. If the MACD line sneaks a hair higher, that would extend the top for the 10-year yield by a month or two but no big move to the upside in yield would be expected during that period.

Discussing Treasury notes and bonds is tricky since yields move opposite to price. A bond bull is a trader that expects bond and note prices to rise and when that occurs, yields drop. Conversely, a bond bear is a trader that expects bone and note prices to drop which sends yields higher. Last week was a selloff in both stocks and bonds (yields higher) until Friday when stocks rallied and bonds came in a bit (both equities and bonds were bot on Friday).

The previous charts show the housing recession ongoing this year. A labor recession started a month ago so add this to the list. The Federal Reserve is most focused on the labor picture and with the blow-out 336K jobs number last Friday everyone says a recession is now completely off the table. Wrong again. The recession is likely starting right now in real-time. The data will not confirm a recession until many quarters after the recession begins.

Thus, if yields are topping out and would be expected to trail lower from now into springtime, that means notes and bonds will be bot sending yields lower. Considering that recession is at the door and economic conditions are worse than the data reflects (the upper middle class and wealthy elite that benefited from over a decade of Fed money printing, the rich got richer and poor poorer, are keeping the US economy afloat but they cannot do that forever), and that the SPX weekly chart remains weak and bleak, the expectation would be a continued selloff in stocks going forward which would occur in concert with yields trailing lower (money flowing out of the stock market into notes and bonds (price up yield down) chasing perceived safety as equities tumble lower).

The weekly chart above has the same vibe as the monthly chart but there are differences. The overbot conditions for yield, and rising wedge pattern, are bearish for yields. All the chart indicators are in negative divergence so there is no more juice to take yields higher, however, note the thrust over the last couple weeks. There is momentum there so a bunch of sideways chop is likely ahead for a week or three as the weekly chart tops out.

The Aroon on the weekly chart is the same description as the monthly chart. Everyone, including the taxi cab driver, Uber driver, Lyft driver, the doorman, shoeshine boy, an analyst holding a coffee cup, and television pundits, universally agree that the 10-year yield will go up for weeks and weeks ahead. The Aroon is a contrarian indicator so the boat fully loaded to one side tells you it is far more likely that yields are topping out over the next week or three, around current levels, and will begin a multi-week down move in yield which will also help kick-in the start of the multi-month down move in yield.

What does all this mumbo-jumbo mean? The 10-year yield is topping-out on both a weekly and monthly basis although there is some short-term momo due to inflation and job data and Fed speak. If you bring up the daily chart, you see the indicators going neggie d but the MACD wants one more high in yield on the daily basis. Thus, expect the 10-year yield to be buoyant for a couple days and that marks the top on the daily basis (say, Tuesday or Wednesday) so yield will then retreat in the daily time frame.

A choppy sideways move would be expected over the coming days and couple weeks as the 10-year yield tops out and begins falling. The timing makes perfect sense. Equities may want to rally further after Friday's thrust higher and this buoyancy in stocks may continue for a week or two as the 10-year yield chops sideways and tops out.

Then, probably when the SPX daily chart tops out with neggie d, stocks will begin falling like rocks taking out prior lows and as the panic sets in, traders will buy notes and bonds sending yields lower. Keystone does not hold any positions long or short Treasuries now but for those of you so inclined, you can look at scaling into the TLT ETF going forward (that is beaten to a pulp) as an intermediate-term trade say into the new year. That's my story and I'm sticking to it. 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 Tuesday Morning, 10/10/23, at 5:22 AM EST: US 10-year yield 4.65%.

Note Added Wednesday Morning, 10/11/23, at 5:55 AM EST: US 10-year yield 4.56%.

Note Added Thursday Morning, 10/12/23, at 7:12 AM EST: US 10-year yield 4.56%.

Note Added Saturday Morning, 10/14/23, at 4:04 AM EST: US 10-year yield 4.62%.

Note Added Tuesday Morning, 10/17/23, at 4:30 AM EST: US 10-year yield 4.75%.

Note Added Wednesday Morning, 10/25/23, at 10:07 AM EST: US 10-year yield 4.91% the 10-year topped 5% to 5.02% this week).

Note Added Thursday Morning, 10/26/23, at 3:00 AM EST: US 10-year yield 4.98%.

Note Added Thursday Morning, 11/2/23, at 7:09 AM EST: The US 10-year yield is 4.70% in retreat (yields down, bond and note prices up) after Federal Reserve Chairman Powell's news conference yesterday afternoon when rates are held steady.

Note Added Thursday Evening, 11/2/23, at 6:39 PM EST: The US 10-year yield is 4.66%.

Note Added Thursday Morning, 11/9/23, at 7:04 AM EST: US 10-year yield 4.53% and dropped through the 4.50% level.

Note Added 11/29/23: 10-year yield 4.27%.

Note Added 12/1/23: 10-year yield 4.22%.

Note Added 12/6/23: 10-year yield 4.12%.

Note Added 12/15/23: 10-year yield 3.91%. The 10-year drops below 4%. Of course it does.

Note Added 12/20/23: 10-year yield drops to 3.86% (yields down note and bond prices up). The major US stock indexes take a hard reversal intraday losing more than -1% across the board. Stocks are selling off and that money goes into the perceived safety of US Treasuries sending yields lower. Of course it does.