Week In Review – April 20

Bond Yields, Bond Yields, and More Bond Yields 

The U.S. 10-year closed at its highest yield on a weekly basis since year-end 2013.

A weekly close above 3.03 percent signals big trouble ahead.   The confluence of fundamentals – i.e., inflationary pressures —  and technical issues, including ballooning budget deficits,  the end of QE, and a foreign buyers strike are driving rates higher.

We doubt the pretty profit picture, which is expected and to some extent already should be discounted, is going to be able to offset the headwinds of higher interest rates.

Head & Shoulders Bottom

The following chart looks like a classic head and shoulders bottom in the 10-year yield on a weekly basis.  A measured move would take the 10-year up to…ugh…3.92 to 4.73 percent depending on where you measure the shoulder.  Either way, Gulp!

The economy would surely break before rates move that high but we could be moving into a period of inflation/stagflation if the trade war accelerates and takes hold.

Week_Chart1

Weekly_Recovery1

 

Weekly_Recovery2

 

Weekly_JFK_Trump_Analog

 

Weekly_Table

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