Stocks And Bond Yields Both Testing Multi-Decade Resistance

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October 12, 2018 7:10am NASDAQ:TLT

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From Chris Kimble: At what point does the rise in treasury yields (and interest rates) matter to the economy and stock market?


Today’s chart looks at the past 4 decades of the 2-year treasury note yield versus the stock market (the Dow Jones Industrial Average).

As you can see in the chart below, the 2 year treasury yield has been in a downtrend for quite some time (1). A steep rally in 2-year rates has yields testing this down trend line right now. The past 2 times the downtrend line was tested were in 2000 and 2007 – both resulted in bear markets!

It’s also notable that the Dow Jones Industrial Average is testing upside resistance within its long-term uptrend channel (2)… it did this in 2000 and 2007 as well. You don’t see stocks and yields testing mult-decade lines at the same time very often!

2 Year Treasury Bond Yield vs Dow Jones Industrials Chart


The iShares Barclays 20+ Yr Treas.Bond ETF (TLT) fell $0.45 (-0.39%) in premarket trading Friday. Year-to-date, TLT has declined -8.68%, versus a 2.40% rise in the benchmark S&P 500 index during the same period.

TLT currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #16 of 28 ETFs in the Government Bonds ETFs category.


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


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