Are Yields Still Heading Higher?
Investors have been optimistic about interest rates and inflation for much of the past year. However, two important charts may undermine those hopes.
Today’s weekly chart returns to the yield on the 10-year U.S. Treasury note.
First consider the series of higher lows since July 2022 – despite improvements in headline inflation numbers. That rising trendline may reflect upward pressure.
Second, there are two levels.
To the downside, 3.82 represented the approximate peaks last June. It was also the near bottom of the range in late December. When an old high becomes a new low, it can suggest that direction is ascending.
To the upside, 4.324 was the peak in June 2008. TNX remained under that level until last September. It dipped back below in November, but is now pushing back toward it.
The combination of the rising trendline and old peak could make some chart watchers expect continuation if the upside is breached.
The second chart is the
EURUSD Euro / U.S. dollar currency pair. The big slide began in June 2021 and accelerated as the Federal Reserve hiked interest rates. EURUSD retraced about half the drop by early last year and has moved sideways since.
Price action has narrowed in the last eight months, highlighted by the converging trendlines. Will that make traders watch for a potential break to the downside?
These patterns could be especially important given the Federal Reserve meeting this week.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options and futures. See our Overview for more.
Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options or futures); therefore, you should not invest or risk money that you cannot afford to lose. Online trading is not suitable for all investors. View the document titled Characteristics and Risks of Standardized Options at https://www.TradeStation.com/DisclosureOptions. Before trading any asset class, customers must read the relevant risk disclosure statements on https://www.TradeStation.com/Important-Information/. System access and trade placement and execution may be delayed or fail due to market volatility and volume, quote delays, system and software errors, Internet traffic, outages and other factors.
Securities and futures trading is offered to self-directed customers by TradeStation Securities, Inc., a broker-dealer registered with the Securities and Exchange Commission and a futures commission merchant licensed with the Commodity Futures Trading Commission). TradeStation Securities is a member of the Financial Industry Regulatory Authority, the National Futures Association, and a number of exchanges.
TradeStation Securities, Inc. and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., both operating, and providing products and services, under the TradeStation brand and trademark. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Visit [url =tradestation.com/DisclosureTSCompanies] TradeStation.com/DisclosureTSCompanies for further important information explaining what this means.
Today’s weekly chart returns to the yield on the 10-year U.S. Treasury note.
First consider the series of higher lows since July 2022 – despite improvements in headline inflation numbers. That rising trendline may reflect upward pressure.
Second, there are two levels.
To the downside, 3.82 represented the approximate peaks last June. It was also the near bottom of the range in late December. When an old high becomes a new low, it can suggest that direction is ascending.
To the upside, 4.324 was the peak in June 2008. TNX remained under that level until last September. It dipped back below in November, but is now pushing back toward it.
The combination of the rising trendline and old peak could make some chart watchers expect continuation if the upside is breached.
The second chart is the
EURUSD Euro / U.S. dollar currency pair. The big slide began in June 2021 and accelerated as the Federal Reserve hiked interest rates. EURUSD retraced about half the drop by early last year and has moved sideways since. Price action has narrowed in the last eight months, highlighted by the converging trendlines. Will that make traders watch for a potential break to the downside?
These patterns could be especially important given the Federal Reserve meeting this week.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options and futures. See our Overview for more.
Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options or futures); therefore, you should not invest or risk money that you cannot afford to lose. Online trading is not suitable for all investors. View the document titled Characteristics and Risks of Standardized Options at https://www.TradeStation.com/DisclosureOptions. Before trading any asset class, customers must read the relevant risk disclosure statements on https://www.TradeStation.com/Important-Information/. System access and trade placement and execution may be delayed or fail due to market volatility and volume, quote delays, system and software errors, Internet traffic, outages and other factors.
Securities and futures trading is offered to self-directed customers by TradeStation Securities, Inc., a broker-dealer registered with the Securities and Exchange Commission and a futures commission merchant licensed with the Commodity Futures Trading Commission). TradeStation Securities is a member of the Financial Industry Regulatory Authority, the National Futures Association, and a number of exchanges.
TradeStation Securities, Inc. and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., both operating, and providing products and services, under the TradeStation brand and trademark. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Visit [url =tradestation.com/DisclosureTSCompanies] TradeStation.com/DisclosureTSCompanies for further important information explaining what this means.
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