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Higher Long-Term Treasury Yields Ahead


The eventuality of higher longer-term Treasury yields in the weeks and months ahead appears to be relentlessly marching towards us now. Time to start monitoring the UltraShort 20+ Year Treasury ETF (TBT) for the next entry window on the long side.

Purely from a technical perspective, last week's upmove in the 10-year yield from 2.94% to 3.33% exhibited the power required to propel yield through an initial resistance zone (3.10-3.30%). This is a warning sign that despite the Fed's objectives and efforts to the contrary, Mr. Market has the ability to control its own destiny -- if such a feat was questionable during the past 18 months of intense government "interference."

That said, the upmove from 3.10% to 3.33% is mere "child's play" compared to the battle that lies ahead in route towards a confrontation with the 4.00%-4.15% resistance barrier. That barrier represents the demarcation plateau of the completion of a major 2-year double-bottom formation.

Should yield rise above its "breakout" plateau, then the underlying pattern will trigger upside target potential to 5.20-5.40% and then to 5.90-6.10%. Today's pullback likely is part of a modest correction back to 3.15%-3.10% prior to the resumption of the yield advance.

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