10-year Treasury Bond Rate At Key Resistance

We’ve posted several pieces on the Treasury market about the bond’s positive technicals versus poor fundamentals.   The 10-year rate is now close to  piercing through key resistance at 2.83 percent.   It is difficult to fundamentally determine why rates are moving higher: 1) a change in economic fundamentals — stronger growth,  increase in inflationary expectations;  2)  sovereign credit concerns spilling into U.S. markets;  3)  reduced foreign capital flows into Treasuries;  4) Fed’s QE2  decision to focus on shorter maturities.

Probably all of the above, in our opinion.  The bullish case, stronger economic growth, should be confirmed by stronger equities and a sharp rally in the dollar.  That is,  a reversal of the weak dollar/strong equity relationship of the past year.

Nevertheless, a close above 2.85 percent would put the focus on next move to the 200-day at 3.15 percent.   Stay tuned!

This entry was posted in Black Swan Watch, Bonds, Credit, Equities, Fiscal Policy, Monetary Policy, Sovereign Risk and tagged , , . Bookmark the permalink.

2 Responses to 10-year Treasury Bond Rate At Key Resistance

  1. David says:

    OK, we blew past 2.85 on the 10 year, getting close to 3%. CA muni ETF funds continue to crash. Commodities and stocks are correcting. And, certain elements of the political spectrum are beating up on Bernanke while James Grant is calling for a return to the gold standard. This week gets off to a bad start. Whoa boys, all work and no play makes for a not so dull market.

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