Treasury Yields Setting Up for Advance
The 10-Year Treasury Bond yield commanded our attention this past week, and we see it as one of the most important charts entering 2010. Why? Purely from a technical perspective, let's notice that three distinct instances in the past 12 months, yield pressed to 3.50% or lower, only to see an upside reversal back above 3.50% very quickly thereafter. In other words, the "beachball effect" kicks in under 3.50%. With the foregoing as a backdrop, let's also notice that yield has been declining since June even though nonfarm payrolls have been improving. My suspicion is that the upmove since the Dubai crisis low a week ago Friday, from 3.53% to 3.74% (+6%), might have been in anticipation of much improved payrolls data (an outlier number) and /or changing perceptions of climing inflation, climbing GDP, deficit-financning, etc. Whatever the case, from my perspective, long term Treasury yield -- and with it the ProShares UltraShort 20+ Year Treasury ETF (NYSE: TBT) -- is setting up for a potentially powerful advance in the days and weeks ahead.
