The treasury bonds market has experienced an uptick in volatility as investors try to figure out the dynamic between global interest rates, currencies, and economic growth. If you haven’t noticed, the moves overseas have also been volatile. Perhaps this is the prelude to change. And, if so, ts for treasury bonds may just be getting starting.
Well, the good news is that we will likely know when that occurs.
In the chart below, I have charted the 10 Year US Treasury Bond Yield (TNX) and 30 Year US Treasury Bond Yield (TYX). Each could be in the process of inverse “Head & Shoulders” bottoming patterns. Both treasury bonds yield charts are testing the pattern neckline at (1). And if this pattern read is correct, a breakout above the neckline could push yields a good deal higher.
From a bond price perspective, what does this pattern look like? Well, let’s invert the charts.
The following charts are the 10 and 30 year treasury bonds yields “inverted” to look like bond prices. Both appear to have made head and shoulders topping patterns with the neckline being tested right now at (1).
Keep in mind that this is a multi-month chart, so it may take some time to get a verdict here. But again, if the neckline gives way, yields could move much higher (while bond prices would move much lower). And should that occur, it would likely have a negative effect on popular bond ETFs like the 20+ Year US Treasury Bond ETF (TLT).
Thanks for reading and have a great weekend.
Twitter: @KimbleCharting
Author does not have a position in any mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
