Yields are on the verge of breaking-out.
In log mode, we can clearly see the trend of yields dating back to the late 1970s.
Consistently lower yields on both the 2 year and the 10 year government bonds.
Representative of both the long and short duration bonds and their yields.
What we can see happening here is a breakout of this downtrend.
We are already at between 2.5-3% on the 10YR and the 2YR yield.
The Federal Reserve's planned tightening schedule combined with the inflation panic will drive both of these metrics up into the 3% range and beyond.
The only way yields could reverse here is through seeing a risk-off move from equities into bonds which would drive up bond prices and in turn, drive down yields.
Similarly, higher-yields could tempt investors into bonds at a point in which many stocks have already entered a bear market and many are set to underperform. Market breadth is set to shrink dramatically as equity bulls focus their efforts into a narrower set of large-cap stocks.
The FED has an interest rates decision next week amd therefore this quarter will be crucial in determining the direction of the markets.
Consistently lower yields on both the 2 year and the 10 year government bonds.
Representative of both the long and short duration bonds and their yields.
What we can see happening here is a breakout of this downtrend.
We are already at between 2.5-3% on the 10YR and the 2YR yield.
The Federal Reserve's planned tightening schedule combined with the inflation panic will drive both of these metrics up into the 3% range and beyond.
The only way yields could reverse here is through seeing a risk-off move from equities into bonds which would drive up bond prices and in turn, drive down yields.
Similarly, higher-yields could tempt investors into bonds at a point in which many stocks have already entered a bear market and many are set to underperform. Market breadth is set to shrink dramatically as equity bulls focus their efforts into a narrower set of large-cap stocks.
The FED has an interest rates decision next week amd therefore this quarter will be crucial in determining the direction of the markets.
