10-YEAR TREASURY YIELD (2.00%) - Cary Street Partners

[Pages:1]JULY 2019

Equity markets rallied strongly during the month of June, evidenced by a 6.9% gain in the S&P 500. Last month's commentary focused on the oversold "buy" signal that our market internals were sending. These measurements of breadth, leadership, and sentiment are very efficient at market extremes, correctly forecasting the June advance. At this point the market internals have moved to a neutral stance, equities are no longer at an extreme, but we are seeing some solid follow through that continues to bode well.

10-YEAR TREASURY YIELD (2.00%)

Monthly bar chart + 12 Month Moving Average + Stochastic Indicator + MACD Indicator

While equities may not be at an obvious extreme, Treasury yields have been trending lower for about nine months, bringing the 10-year to a proving ground on its chart. The 2.0% level not only holds psychological significance as a round number, but also approximates important support at the 2017 low. In 2018, a multi-decade downtrend in 10-year Treasury yields was reversed, but the potential long-term implications of that reversal have been tempered by the subsequent retracement. Modest downside follow-through would lead to a decisive breakdown and lower low, putting next (and final) support at the 2012-2016 lows. This support is found at approximately 1.4%.

Sources: Fairlead Strategies, LLC; Bloomberg Finance LP.

This places importance on the near-term action in Treasury yields. Stabilization appears likely according to our shortterm trend-following indicators. Long-term oversold conditions should help moderate the downside momentum behind 10-year Treasury yields.

In discussing Treasury yields, one should always keep in mind that bond prices move inversely to yield. Consequently, chart terminology such as "oversold or downside" regarding yields also mean that Treasury prices are "overbought or extended on the upside". Bottom line ? we are at an inflection point in terms of yield and price. If the 2.0% test holds, as we think it will, long term yields will rise and prices fall.

Cary Street Partners is the trade name used by two separate limited liability companies, Cary Street Partners Investment Advisory LLC, a registered investment advisor; and Cary Street Partners LLC, a registered broker-dealer and a member of FINRA and SIPC. Luxon Financial LLC is the sole owner of Cary Street Partners LLC and Cary Street Partners Investment Advisory LLC.

This information was prepared by or obtained from sources believed to be reliable, but Cary Street Partners does not guarantee its accuracy or completeness. Any opinions expressed or implied herein are subject to change without notice. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. An investor cannot invest directly in an index. Past performance is no guarantee of future results. CSP2019139

? COPYRIGHT 2019 LUXON FINANCIAL LLC, ALL RIGHTS RESERVED

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download