Have US Treasury Yields Bottomed? Are You Sure?

The consensus view is the Fed will hike 3-4 times in 2018 and that treasury yields long ago bottomed. Agree? I don't.

US Treasury Yields 1998-Present

The above chart suggests it is far too premature to believe that long-term yields have bottomed.

US Treasury Yields 5-year Duration and Under 1998-Present

Other than zero-bound 3-month treasuries, it is difficult to present a clear technical case that even short-term rates have bottomed.

And given that a huge percentage of the world's bonds trade at negative interest rates, one cannot make a legitimate case that any bond yields have bottomed.

Mike "Mish" Shedlock

Comments
No. 1-9
Cocoa
Cocoa

The rates can go negative...if there is a race for money to get to safe harbor. ZERO is not the bottom, it's just the beginning. Losing -3+% is better than losing 100% if certain asset products blow up like derivatives, bitcoin, real estate bubbles and so on. That will be a lot of money. The FED may drive it negative to flush out money that's hoarded and give banks a way to steal money from you to compensate for loss of lending revenue.

8dots
8dots

3) the bottom line of the 5Y channel is much more interesting than the resistance line. It 's immerse with all other short duration rates. The 3M have the same resistance (top) line, but the distance from the support line is wider.The lows, are higher lows and the whole period of hugging the zero line since 2008 to 2015, the 3M, relative to the channel support line, was rising with zero volatility , and lately spiking up, approaching the resistance line. The channel don't care about the zero line. We do. if the 3M will be above the 5Y it will hit the resistance line, it will probably be a spike. After spiking up, 3M might go in direction of the to the support line, or even spike down below the zero line.

8dots
8dots

2) $UST5Y resistance line should be the tops of 1989, 2000 & 2007.

8dots
8dots

1) The SPX possibly had a buying climax on 11/30 on high vol. and the fast response the next day.

El_Ted0
El_Ted0

Mish is close to being the last Deflationist. We've got an inflationary Fed, ALWAYS an inflationary fiscal policy & inflationary tax reform looming. I don't see how interest rates go lower without a recession & major market correction.

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