The bond market didn’t care much more for the 7-year Treasury today than they did the 5-year Wednesday. While there wasn’t as much of a tail, we have to remember that is partly because yields were up 25bps over the two days prior to the auction. Although the market rallied off the worst levels of the day, TYM0 was still -17.5/32nds on the day and the 10y yield hit 3.89%. It is a little early to be sure, but it certainly appears as if the 4% psychological hurdle will be tested. Some people, in fact, will begin to see an inverted-head-and-shoulders pattern in the charts; suffice to say that the formal projection of such a pattern would project to well over 5% in nominal yields.
I’m not a big fan of technical analysis, although it was working for a technical analysis firm that I got my career started. But some patterns are so very obvious on the charts that you just know other investors or traders will notice them and pay attention to them. The definition and interpretation of head-and-shoulders patterns is very subject to the eye of the beholder, as is most of this stuff, but when you look at the chart below, click to enlarge, (Source: Bloomberg) it’s hard not to notice. When it’s “hard not to notice,” I tend to take notice.
Chart: If the techies have their way, this could get ugly.
No comments:
Post a Comment