Did someone say 'pop'?
The chart above is a rather ominous one as 10-year Treasury yields are threatening to break higher more meaningfully for the first time in decades. Yields have jumped up to 3.17% now and is closing in on the 2018 high of 3.25%. At the time, the move was capped by the 200-month moving average (blue line). We already blew past that level in April.
It's typically rare to see markets sell off that heavily and across all asset classes but that seems to be the case now. Adam highlighted a good point on deleveraging and it is something that investors and traders have to be mindful about.
There's also the argument that the charts don't lie and when you look at the one above, boy is it tough to go against the momentum if there is a further upside breakout in yields.
The bond market "bubble" is arguably one of the most mythical things about financial markets in the past two decades. Is it time that we see a major shift in that space? If so, it can get real ugly.
In any case, the trend so far this year has been unrelenting to say the least. A look at the moves today:
- 2-year Treasury yields +4.3 bps to 2.739%
- 5-year Treasury yields +5.2 bps to 3.098%
- 10-year Treasury yields +5.2 bps to 3.175%
- 30-year Treasury yields +4.4 bps to 3.265%
