The 10-YR Treasury security was in the news again this week. It was headline news mostly because the yield had traded over 3.000% and stayed there. In fact, I saw it trade as higher as 3.113%. How much higher can it go?
Of course there is always two sides to a story, and especially a trade. For every buyer there is a seller that expects it to go the other was, and in the 10-YR yield market it’s the same. What I am saying is that traders were willing to take the other side of the rising yield market and buy the 10-YR Note, thus forcing yields lower, as happened today.
In this first chart below we see a strong reversal in this market that is identified by the buying in the Treasury ETF – $TMF. TMF will rise when traders buy the Notes in anticipation of a falling yield.
In this next chart we see an algorithmic signal that believes the 10-YR yields will fall as prices rise. So far so good… but what will next week bring?