Tag: 10-Year Treasury Yields

Ten-year Treasury Note yields are testing support at 1.85% after consolidating below 2.00% for 2 weeks. 13-Week Twiggs Momentum below zero continues to indicate a primary down-trend. Failure of support at 1.85% would test primary support at 1.65%.

Correction on the Dollar Index has lasted 3 weeks but continues to respect the first line of support at 95.50. Rising 13-week Twiggs Momentum also continues to indicate a strong (primary) up-trend. Recovery above 100 is likely and would offer a target of 110*.

* Target calculation: 100 + ( 100 – 90 ) = 110

Gold is testing resistance at $1200/ounce on the back of softer interest rates and a weak dollar. Breakout above $1220/ounce would indicate a rally to $1300. But 13-week Twiggs Momentum below zero continues to indicate a primary down-trend. Respect of $1300, or reversal below $1180 would suggest another test of primary support at $1140/$1150.

* Target calculation: 1200 – ( 1400 – 1200 ) = 1000

Ten-year Treasury Note yields are re-testing resistance at 2.00%. Recovery above 2.25% would indicate the correction is over and a rally to test the key resistance level of 3.00%. 13-Week Twiggs Momentum below zero, however, continues to indicate a primary down-trend. Failure of support at 1.85% would signal a test of 1.65%.

The Dollar retreated from long-term resistance at 100 as expectations of higher interest rates eased. Rising 13-week Twiggs Momentum signals a strong (primary) up-trend. Respect of support at 95.5 would confirm.

* Target calculation: 100 + ( 100 – 90 ) = 110

Gold rallied on the back of a soft dollar and weak interest rate outlook, but failed to hold above $1200/ounce. 13-Week Twiggs Momentum below zero continues to indicate a primary down-trend. Follow-through below $1180 would warn of another test of support at $1140/$1150, while a rise above $1220 would test $1300.

* Target calculation: 1200 – ( 1400 – 1200 ) = 1000

Ten-year Treasury Note yields are testing support at 2.00%. Recovery above 2.50% would indicate another test of 3.00%. But 13-week Twiggs Momentum below zero continues to signal a down-trend. Another peak below zero would warn of a decline to test the all-time low at 1.40%. Breakout above 3.00% appears remote at present, but would signal the end of the secular (20+ year) down-trend.

The Dollar is on a tear, testing long-term resistance at 100. Rising 13-week Twiggs Momentum signals a strong (primary) up-trend. Breakout would offer a new target of 110*, but first expect retracement to confirm the new support level.

* Target calculation: 100 + ( 100 – 90 ) = 110

Gold

Gold fell through long-term support at $1200 and is testing the last line of support at the recent lows of $1140/$1150 per ounce. Reversal of 13-week Twiggs Momentum below zero warns of another (primary) decline, with a target of $1000*. Breach of support at $1140 would confirm.

* Target calculation: 1200 – ( 1400 – 1200 ) = 1000

The prospect of higher interest rates is fast approaching, but 10-Year Treasury yields retreated below 2.0%, warning of another test of the December low at 1.40%.

The weight of foreign purchases, for reasons other than yield (dollar peg/currency manipulation), may be overwhelming the market response. This has happened before, in 2004/2005, when the Fed was alarmed to find that long-term yields failed to respond to monetary tightening. The graphs below are from a 2012 report by DO Beltran (and others) at the Fed. The Fed Funds Rate was steadily increased between mid-2004 and the end of 2005, but 10-year yields declined slightly over the same period.

The reason was fairly obvious: a massive surge in foreign purchases (mainly from China) had left the long-term market awash with liquidity. US monetary policy was effectively being controlled from Beijing.

I cannot understand why this abuse has been tolerated.

The Dollar

The Dollar Index has been consolidating for the last 5 weeks, but the narrow range is a bullish sign and the Dollar is likely to strengthen further. Breakout would offer a medium-term target of 100*.

* Target calculation: 90 + ( 90 – 80 ) = 100

Gold

Spot Gold is testing support at $1200/ounce. Reversal of 13-week Twiggs Momentum below zero warns of another decline. A trough below the zero line would strengthen the bear signal.

* Target calculation: 1200 – ( 1400 – 1200 ) = 1000

The strong Dollar, low inflation and higher interest rates all point to another decline, but so far support has held firm. Completion of another trough at this level would strengthen the argument that gold is forming a long-term bottom. Possibly with help from Beijing.

10-Year Treasury Yields found support above the December low of 1.40%, recovering above medium-term resistance at 2.00%. The outlook is hardening around a Fed increase in short-term rates by mid-year. A higher trough would suggest that the long-term down-trend in yields, shown below on an annual chart, is coming to a close. But only breakout above resistance at 3.00% would confirm that the secular bull-trend in bonds has ended.

The Dollar is strengthening on the back of low inflation and expectations of higher rates — bearish signs for gold.

Spot Gold remains in a bear trend, testing support at $1200/ounce.

Reversal of 13-week Twiggs Momentum below zero warns of another decline. A weekly close below $1180 would strengthen the bear signal.

* Target calculation: 1200 – ( 1400 – 1200 ) = 1000