Higher Interest Rates On Pause? 10 Year Yield In Focus

Korey Bauer

technical analysis, stock chart analysis, stock charts, technical chart, chart analysisThere has been a steady buzz about higher interest rates coming from the media and many institutional investors.  But are higher interest rates coming anytime soon? I don’t think we are in an environment where interest rates are going to rise anywhere near as fast as we saw in 2013.  The Fed sent a minor shockwave, when Janet Yellen, the new Fed Chair, made her remarks that they may raise interest rates 6 months after the tapering process is finished.  I think the FED is committed to getting the U.S. economy and job market back on track without causing any major hiccups.  Okay, enough with the Fed. Let’s take a quick look at some charts.

The 10 Year Treasury Yield (TNX) looks to be ready to make a significant directional move over the coming days/weeks – see chart below.  The MACD (Moving Average Convergence Divergence) indicator is depicting a negative divergence which means that momentum seems to be slowing down; and this seems to put higher interest rates on pause over the near-term.  The cycle that has been most accurate is the 450 or so day cycle for the 10 year treasury.  One can see the cycle points to major lows in the treasury yield in 2009, 2011, and in 2012.

10 year treasury yield 5 year chart

The 10 Year Treasury Yield has also been trading in a very tight range since July of 2013.  I think this range will be taken out on a directional basis very soon and depending on the direction, it may have a negative/positive affect on global equity markets.

tnx range chart at higher interest rates

Thanks for reading. Trade safe.

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