10 Year US Treasury Yields
The yield on the 10-year T-Note has bounced off of support near 2.15% and the momentum up-trend that emerged in 2016 remains intact. Near-term yield resistance has emerged near 2.40%, but the breakout in momentum could be signaling that this is a pause, not a peak. A retest of the early year highs near 2.6% looks likely later this summer.
Accompanying the recent bounce in bond yields has been a rally in the Financials sector. We are looking here specifically at the Broker/ Dealer index. Momentum is improving and the index itself has made a marginally higher high. We are actually paying closer attention to the relative price line that shows the performance of the Broker/ Dealer Index to the S&P 500. A breakout to new highs there could be bullish for stocks overall and suggest bond yields are set to resume their move higher.
S&P Industrials Sector
From a price and breadth perspective, the Industrials sector is moving toward new highs (the sector-level ETF has already made a new high). Momentum is improving after having stalled earlier in the year, and the relative price line continues to trend higher off of the 2015 low.
Thanks for reading.
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.