Interest Rates Testing 25-Year Breakout Level (IEF)

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October 26, 2017 6:29am NYSE:IEF

bonds market

From Chris Kimble: Interest rates based upon the 10-year yield (TNX) have been heading lower for years, more than 25-years actually.


Below looks at the yield on the 10-year note and reflects that an important and rare test is in play.

Yields on the 10-year note have remained inside of falling channel (1) for the past 25-years. In the past, as rates have come near or touched the top of this channel, they were actually peaking.

At the start of this year, rates hit the top of the channel and backed off. Over the past 10-months rates could be forming a bull flag pattern, just under the top of falling channel (1). Of late rates have risen at (2), bringing yields up to test long-term falling resistance again at (3).

What rates do at (3) should be big-time important for bonds, banks, utilities and other interest rate sensitive assets.

Rates have peaked and headed lower when they have hit long-term resistance for years. The BIG question for investors in many assets classes is…“Will It Be Different This Time!”

The iShares Barclays 7-10 Year Trasry Bnd Fd (IEF) was unchanged in premarket trading Thursday. Year-to-date, IEF has gained 1.85%, versus a 15.26% rise in the benchmark S&P 500 index during the same period.

IEF currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #2 of 28 ETFs in the Government Bonds ETFs category.


This article is brought to you courtesy of Kimble Charting Solutions.


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