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US Treasury Yield Comments ArchiveThe
US Treasury Yield Chart represents an index, which, divided by 10, is equivalent to the current
30 Year US Treasury Yield.
The End Is Nigh (4/11/01) After Wednesday, the bond is within a hair's breadth of that sell signal (see below) going from intermediate to long term. Yields are rising in spite of, or perhaps because of, crashing short term rates, [which have since turned up as of 4/17] caused by the Fed's aggressive reflation of the money supply reigniting inflationary fears. The big thing mitigating against total economic collapse has been the real estate bubble and especially the mortgage refi bubble. The turn in the long end of the market is going to slam that door shut. The implications for stocks are horrendous, but it will take time for the sheep herd to wake up. Just keep this in the back of your mind as the rally, and bullish calls in the stock market reach hysterical proportions.
It figures, just about the time the world world has turned universally bullish on bonds, yields hit a bottom and turn with a vengeance. Dr. Stool has been on the lookout of this for weeks, and here it is. It's kind of disappointing. That's one less place to hide. Before jumping to any long term conclusions, let's just watch how this plays out over the next couple of weeks. It may be another one of those fakers. We'll see upward pressure on yields for a week or three, then a pullback. The size and shape of the pullback will be the key to the long term picture. It would take an upturn in the long term Percentage Price Oscillator to confirm a major trend change. Down, But Iffy (3/25/01)The consensus on bonds is universally bullish, and that's a little worrisome. Previous intermediate projections were to 5.10-5.15, but the index was resistant to breaking below 5.20, and the centered moving averages for intermediate cycles are now projecting to 5.25, which has been reached. Long term averages are still projecting a low of 4.80-4.90, but that is well above the 4.55 projection of a few weeks ago. The trend in yields remains down, and the little bump up has not turned most indicators positive. However, downside momentum is slowing, and that might be the precursor to a reversal. The inflation-deflation argument has not been settled, and the outcome is hanging in the balance. You need to keep your eye on the indicators on this chart in the days ahead. So long as the 53 day stochastics remains below the smoother, a significant upmove in yields will not happen. But once that indicator does break to the upside, move some chips out of the bonds, and into bills for awhile. Keep an eye on the weekly chart also. Update(3/16/01): The projection for the ten week cycle low is now 5.15. The four month cycle low is pointed at 5.10. The daily oscillators are very weak, and it's possible the projections are too conservative. The projected lows are about where the lower channel boundary of the long term downtrend will be, over the next few weeks. (See weekly chart)
Verdict
(2/27/01) There's a ten week cycle low due around March 9. The measuring objective for the move is 5.20 to 5.25%, down 10 to 15 basis points from the current 5.34 yield. The hourlies are also pointing to 5.20. More interesting is the fact that this move signals a down turn in the four month cycle. The price objective for that cycle appears to at least down to 5.15. It's still a little early in the downturn to have a high degree of confidence in that projection. Depending on how quickly yields drop in the next few days, that number will adjust some.
Which
Way Now (2/17/01) That double bottom in the 5.35 range looks interesting. There are divergences in the oscillators which could be the precursor to a reversal. Dr. Stool examined long term centered moving averages, and they are suggesting that the long term downside objective was in the range of 5.10 to 5.20%, which is awfully close to where we've been in the last two months. Now get this. On the weekly charts, the low for the intermediate cycles projects to 5.30, and we've been there. If bond yields do begin to rise from here, Dr. Stool thinks that this was the bottom.
Whoa!
(2/11/01)
Backed-up
(2/3/01) The downside objective had been 54.20 for the short term move. That was reached on Thursday. There should be some more backing and filling here as the Deflationites argue the outlook with the Inflationistas. Dr. Stool says that until there is evidence that the powerful long term downtrend has reversed, he will remain a Deflationite. Deflation is great for bonds but disastrous for stocks.
Short
Term Peak? (1/23/01)
Test
One Two (1/22/01)
Back
From the Brink (1/17/01) More Worries (1/14/01) Those seeds of an upturn in bond yields that Dr. Stool saw last week are beginning to bear fruit. That's really shocking, because it's a stealth move. Virtually every pundit on the street is looking the other way. The expectation of lower rates is nearly universal. Now is this just another counter-trend rally, similar to the one in September, or is something more sinister at work here, like a flight out of the dollar, and fears of stagflation or even, staghyperflation. (New word coined by Dr. Stool.) It sure looks like that target of 5.65% will be exceeded. The 20 day moving average has turned higher, and the index is a hair above the 53 day average. It looks like there's some real thrust here, and the four month cycle is now in an up phase. Keep an eye on that 57.5 level (5.75%). If the advance is not contained near that level, the bull market in bonds is kaput, and all the markets are going to be in for a hair raising ride.
Fed cuts rates bond yields up, Bond yields up! (1/5/01) Inflation fears already? The 20 day stochastics whipsawed again and is now signaling an up phase that could last a couple of weeks, and looks like it should carry back to 5.65%. The big question now, which must remain unanswered for the time being is, has the market seen the bottom in long term interest rates. Cyclicality is now up on both a short and intermediate basis, for up to three months. Positive cyclicality does not necessarily mean that the yield index will move up, only that investment mood swings will be more favorable for an upcreep, or at least for the decline to be arrested. The fed does not control bond yields. This is one of the indexes to watch to gauge what investors think about the future-- inflation or deflation. Dr. Stool can project a short term cycle target to 5.65%, but it's too early to say what the intermediate target is. The longer term downtrend is quite steep, and a weak economy means deflation. For now, the long term target of 4.50% or lower is still in place. If yields recover to the 88 day moving average and turn it up in the next two months, that target will not be realized, and you might need to start worrying about a Weimar Republic scenario. At this point they still need to get through the twenty day average to simply confirm that the short term trend is up. If they can't do that, then it's deflation, and stock prices go through the floor, along with bond yields.
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