QE3 POINTS TO HIGHER INTEREST RATES AND LOWER T-BOND PRICES
QE3 POINTS TO HIGHER INTEREST RATES AND LOWER T-BOND PRICES
QE3 POINTS TO HIGHER INTEREST RATES AND LOWER T-BOND PRICES... Chart 7 shows the 10-year Treasury Yield ($TNX) with the quantitative easing dates in yellow. The 10-year Treasury Yield rose as QE1 and QE2 got started. This means treasury bonds fell, which is bullish for the stock market. Money moving out of treasuries is money that is available for stocks and riskier assets. The yield peaked when QE1 ended and fell sharply at the end of QE2. At the chart now stands, the yield is on the verge of a breakout as QE3 commences. This fits with what happened at the beginning of QE1 and QE2. Also notice that the Percent Price Oscillator (PPO) formed a large bullish divergence and the decline from April 2010 to July 2012 traced out a five wave sequence. A break above the August high would target further strength towards the 24 (2.4%) area.
Chart 8 shows the 30-Year US Treasury Bond ($USB), which moves opposite to treasury bond yields. Notice how the long bond peaked near the beginning of QE1 and QE2. Sharp declines followed these peaks and the long bond bottomed in the middle of these quantitative easing programs. $USB surged when QE1 ended and again when QE2 ended. Drawing from the past, the long bond looks vulnerable as QE3 commences. The April trend line and broken resistance mark support around 146. A break below this level would be bearish for bonds.
QE3 POINTS TO HIGHER INTEREST RATES AND LOWER T-BOND PRICES... Chart 7 shows the 10-year Treasury Yield ($TNX) with the quantitative easing dates in yellow. The 10-year Treasury Yield rose as QE1 and QE2 got started. This means treasury bonds fell, which is bullish for the stock market. Money moving out of treasuries is money that is available for stocks and riskier assets. The yield peaked when QE1 ended and fell sharply at the end of QE2. At the chart now stands, the yield is on the verge of a breakout as QE3 commences. This fits with what happened at the beginning of QE1 and QE2. Also notice that the Percent Price Oscillator (PPO) formed a large bullish divergence and the decline from April 2010 to July 2012 traced out a five wave sequence. A break above the August high would target further strength towards the 24 (2.4%) area.
Chart 8 shows the 30-Year US Treasury Bond ($USB), which moves opposite to treasury bond yields. Notice how the long bond peaked near the beginning of QE1 and QE2. Sharp declines followed these peaks and the long bond bottomed in the middle of these quantitative easing programs. $USB surged when QE1 ended and again when QE2 ended. Drawing from the past, the long bond looks vulnerable as QE3 commences. The April trend line and broken resistance mark support around 146. A break below this level would be bearish for bonds.
