About a mount ago we asked if yields were about to break out. At that time the 10-Year Note ran right into resistance at 2.25% and paused. That is no longer the case. As you can see from the chart above, yields have now pushed above that level.
The 2.25% resistance line was nothing to sneeze at. It held for well over a year. The next major long-term resistance line is at around 2.6%. This brings out a number of important questions. In fact, more questions than anyone can answer at this point. For instance,……
- Was the secondary bottom in yields set in early January?
- Will yields now stage a multi-year, even a multi-decade advance?
- Is this signaling the FED will raise rates and soon?
- Does this spell doom for the stock market?
- Etc….
Only time and market action can answer the questions above. At least for now, I am sticking to my overall long-term forecast. The secondary bottom in yields of 1.4-1.5% is not yet in and we are on schedule to see it over the next 12-24 months.
Although I might change my opinion if yields are able to break out above 2.6%. Further, this is the most important market to watch over the next few months. Should yields break out and spike, we might have another 2008 on our hands.
