While I wish the “Yield Wave” were the name of a new analytical technique I discovered it is more mundane – and negative.
In today’s Barron’s Online column, I talk about the wild ride all markets took Tuesday and what it means going forward. Towards the bottom of the piece I talk about Treasuries and how the long bond has been trending lower for several weeks.
It was no secret that the long end and short end of the curve looked different with the short yield chart heading down, down, down, the middle holding its ground and the long yield moving higher.Today, before the Fed said it would basically do what it said it would do last week – buy billions (use a Carl Sagan accent) of dollars worth of Treasuries – the 10-year yield had a tentative inverted head-and-shoulders breakout. It already had a breakout and test of a falling trendline so this was more evidence that the bond rally was over.
Then I talked about the wave spreading over the short-end, too, with the five-year sporting a bullish RSI divergence (did not say that last part in the column) and the two-year edging higher all week.
The yield curve is on the move even though it does not look like much on an actual yield curve chart just yet.
All of you bond market spread junkies are encouraged to chime in with your take.
