Are we headed for a test of the 1998 ten year yield low of 4.1%? In order for that to happen, we need to see a failure of the 2006 low of 4.29% (42.89 TNX). Having tested this level three times now, it is starting to look very likely. I am longer term bearish on the long bond, namely because of mounting inflationary pressures, but it might be prudent to see how the current level holds up before thinking bond short. This will also be an important clue for equities. The monthly chart is clear: equities cannot sustain a rally when bonds catch a strong bid (yields drop).
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on Sunday, November 04, 2007 at 11/04/2007 11:24:00 AM.
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