Lower Yields Are Bulls’ Best Hope at the Moment

[This corrects the earlier version, which referred to yields on the 30-Year T-Bond.] Stock market bulls could catch a break if the retracement in Treasury yields continues for a while. The chart shows yields on the Ten-Year Note to have peaked last week at 3.25%.  The correction has since hit 3.12% and could conceivably go lower. Although my rally target at 3.32% lies significantly above, that target comes from the weekly chart, and charts of lesser degree look maxed out for the time being. If so, the bulls had better make hay while the sun shines, since a move in yields to new cyclical highs will weigh heavily on stocks and stifle their upward progress. Mortgage rates are already at their highest point in years, and it won’t be long before the negative impact on home sales that has already occurred will spread into auto leases.

  • John Jay October 16, 2018, 10:02 am
  • none October 16, 2018, 5:36 am

    The yield market is at the capitulation stage, peaking yields can take place in many ways. The future market crashes as yields start to move with ‘force’ as in terms of having a lot of ‘effort in volume’ but ‘little result in price’ movement.

    This peaking of yields can take several weeks as a top in worked out, once this high is created a lower yield market for months and years are ahead, to new all time lows, and a prime rate of 1% towards a generational low point. This is a ‘trap’ in yields and ‘not’ a major generational turn as many see it today. Buying bonds here longer term are a great deal.

    The 40 -60 trading time frame after the 10/03 peak in stock prices is a time frame where the stock indexes will more than likely cause yields to peak and crash the future bond contract.

    Within hours the stock indexes will pivot causing another leg lower to a 1st support low in stock pricing.

    Over all observing INDU 15,300 is a major target in the longer term 1st wave point.

    The GC market upward longer term move towards new highs is real.

    Have a great day Rick.