Treasury Yields Taking a Break

That was a pretty big move in yields that we just saw. The gain was a quick 14% after crossing the 50-day moving average on a gap higher (see here). In total we witnessed a 30%+ move in less than a month. But then came the dreaded downward-sloping 200 day moving average putting a halt on the whole advance. At least for now.

In addition to the resistance from the slope of the longer-term smoothing mechanism, we also have to remember that key support from December through February right here at the levels. How could we not acknowledge that all of that former support should add to the supply right here? I think it would be naive for us not to recognize that some time is needed for both the moving average to at least flatten out and for some sellers to do their thing. And that's OK.

It looks like after some time has passed, yields should continue higher and get up to the next resistance levels near 2.40%. That represents close to a 40% move from current levels. But I don't think we're there yet. I would wait for yields to chill out a bit, gather some composure and get ready for the next move higher. But not expecting much before Labor Day.

We'll be looking for a move back above last week's highs to signal that another major move is coming. But that should take some time. And again, that's OK.

Tags: $TNX $TLT $IEF $ZN_F