Market Overview

Bond Yields Seal The Deal

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One of the most important charts that any trade can follow is the chart of the 10-year U.S. Treasury yield. When yields move higher it means that bond prices move lower. So if you are following an equity like the iShares Barclays 7-10 Year Treasury Bond Fund (NYSE: IEF), or the iShares Barclays 20+ Yr Treasury Bond (ETF) (NYSE: TLT) you should realize that yields will move inversely to these equities. When bond yields move higher it will usually have a negative effect on the interest rate sensitive sectors such as utilities, REITS, home-builder stocks, and many consumer staples. 

Today, the yield on the 10-year U.S. Treasury bond surged above 2.4 percent. This looks to be a breakout move on the yields today. Please understand, the yields are now extended and may pullback in the near term, but any consolidation on the yield chart should signal further upside. It would not be surprising to see another 50 basis point move in the yield on the 10-year U.S. Treasury Note. Some ETF's that will trade higher with bond yields include the ProShares UltraShort 7-10 Year Treasury (ETF) (NYSE: PST), and the ProShares UltraShort 20+ Year Treasury (ETF) (NYSE: TBT). 

Nicholas Santiago


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Posted-In: Bonds Economics Markets Trading Ideas


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