10-Year Treasury – Page 2 – Andrew Thrasher

Bonds Are Not Confirming The Drop in Equities

Posted on November 9, 2012 by Andrew Thrasher, CMT

The bond market is a great indicator for equities. Often times what takes place in bonds typically precedes the action in stocks and is a way we can confirm price action. We saw an example of this in March when the 10-year Treasury yield was making a lower high while the S&P 500 was making a higher high. Although back after Opp Twist was announced in late 2011, bond yields also diverged from price but the equity market was able to hold its ground, keeping the advancing going for a few more months.

During this drop in equities of a little over 6%, we have not seen bond yields correct by the same magnitude. Actually, the yield on the 10-year Treasury has been relatively flat, if not up.

Bond traders are considered the ‘smart money’ and if they aren’t convinced of the recent weakness in equities, then I’m not sure how much more pain bulls will have to sustain. Equity bears will need to convince the bond market that it’s time to start bidding up Treasury’s for them to stay in the driver seat and keep stocks in a down trend.

This isn’t enough for me to shift my view on stocks but it does make me hesitant to call for continued weakness when bond yields are diverging. So while we get a small pop in stocks today, keep an eye on Treasury’s to get a feel for where things might be headed.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+.

Is The 10-Year Yield Calling For a Rise in Bond Prices?

Posted on August 22, 2012 by Andrew Thrasher

Well the S&P 500 finally saw some weakness yesterday. Based on what I’ve seen on various blogs and Twitter, it’s amazing how quick trader’s sentiment flipped to bearish. The last few weeks it felt like traders hated the rally, but the smarter ones knew not to fight the tape and to respect Mr. Market. Has the tide shifted? We shall see. My take on things is pretty well documented on this site so I won’t rehash it now.

Bond’s have been a big story it seems this year, with yield taking out a new all-time low in July, it’s hard to believe that we are already at a point of being potentially overbought on the 10-year yield. Which is the chart I wanted to share with you today.

Below we have $TNX, the yield of the 10-year Treasury Note. On the top panel I’ve plotted just a simple 14-day Relative Strength Index (RSI). I’ve put blue circles on past occurrences of the RSI breaking above 70, and as you can see, this has resulting in past resurgences in bonds (with yields dropping as the chart shows). 10-year yield has also found its 200-day moving average (blue line), which is acting as resistance.

So we have momentum possibly being overbought and resistance showing up for the yield on 10-year Treasury bonds. Pre-market action this morning in $TNX appears to be confirming this, dropping to 1.76 at the time of this writing.

U.S. Treasury’s Ratio With The S&P 500

Posted on August 10, 2012 by Andrew Thrasher

Today’s chart is a weekly look at the ratio between the price of 10-year Treasury’s and the S&P 500. When the ratio is falling, it indicates the S&P is outperforming Treasury’s, and vise versa when it is rising.

On a weekly basis, it seems when the ratio drops below 0.095 we hit a turning point in the market. Now it’s important to note here that this ratio is not a trigger to buy and sell equities or bonds (plus I don’t make those kinds of recommendations on this site), but to take the temperature of the two markets as they battle out performance and tend to revert back to a mean.

I’ve circled the past instances of the ratio hitting low levels. I’ve included the drop in 2010, although it doesn’t get to 0.095, it gets pretty close.

That’s all I have for today. Have a great weekend.

New All-Time 10-Year Yield Low

Posted on May 31, 2012 by Andrew Thrasher

Some people remember where they were when Kennedy was assassinated, others remember the moon landing. Well today you need to remember the 10-year Treasury hit a new all-time low yield! According to James Bianco via Barry Ritholtz, the previous low was in 1946 at 1.54%. Today’s intraday low (so far) has been 1.536%.

James Bianco: What Is The All-Time Low 10-Year Yield?

Update: Intraday low ended up being 1.533%