Wednesday, May 30, 2007

10-Year Rates Increasing

The 10-year Treasury Bond has been selling off for the last few weeks, sending yields to the 4.9% level. Here's a daily chart from

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Notice the following.

1.) Prices sold-off starting in early March (remember, price and yield move inversely). They stabilized from late April to early May when they resumed their sell-off. The trading pattern is a standard rally, consolidation, rally pattern and indicates a fairly orderly path to the current price level.

2.) The 10-year yield is approaching a 6-month high.

Here's the weekly chart.

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Prices have been in a trading range since late 2006. If they break from this range we could approach the multi-year highs in yield.