Inflation, recession, Federal Reserve (‘Fed’), interest rates, strong US Dollar, slowing economy, compressed valuations, Fed pivot, midterm elections… the list goes on and on.
In March 2022, and again in July 2022, we looked at one of the core elements of the US economy: the 10-year treasury note yield (TNX, ^TNX).
With all the recent developments in the economy, the note yield kept climbing up. Last week it broke the recent mid June high of 3.483% by printing 3.49%. It ended the week at 3.448%.
During all this time, the best respected weekly moving average support lines (body and wick) remained on a similar trajectory. Our July 31st post noted the 59-week SMA was tickling 2% from below. Today, the SMA stands at 2.184%.
Both the body and the wick weekly moving average support lines registered on January 11th, 2021. That’s a year and 8 months ago. The distance between the yield and the support line is quite substantial.
The approaching Fed interest rate decision on Wednesday, September 21st, will be an important event to follow. However, the market response to the decision will be no less important dynamic to watch.
Some think the 10-year treasury note yield will break above 3.5% as a result of further tightening of financial conditions. Some guess the tightening won’t be as hawkish, and wait for a double top to confirm.
We don’t predict market data. However, if the yield does turn, you know which ultimate support line to watch for a consequential pivot.
