Thursday, February 9, 2012

Treasuries breaking down ...

The market continues to grind higher.  And we're starting to get confirmation of this rally from the Treasury market.  Here's an updated daily chart of the Ten Year Treasury Note yield I posted in Tuesday's blog post and as you can see it has clearly broken out of the consolidation triangle that has been forming for some months:

Notice the green/red horizontal line and the arrows.  We have significant resistance at the 2.10% level.  Any breach of this level to the upside will confirm a short to intermediate term breakout.  This would be good for equities because higher rates speak to a strengthening economy. 

This trend is also confirmed on the daily TLT (iShares Barclays 20+ Year Treasury Bond ETF) chart which is a proxy for the long end of the Treasury yield curve:

Prudence dictates we continue to watch these charts to insure there's no "head fake".