Interest rates about to head lower? Is that possible?

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by Chris Kimble

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With numerous stock indices hitting all-time highs, is it possible that interest rates could be peaking?  It does seem unlikely in my humble opinion.

This chart looks at the yield of the 10-year note (TNX), over the past 10-years. The rally in yields that started in the summer of 2016 is now back at the same level yields peaked in 2013. As rates are testing old highs, momentum recently hit the highest level since 2013 and looks to be turning lower and creating lower highs.

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While TNX is testing the 2013 highs over the past few months, it could be creating a “head & shoulders topping” pattern, with neckline support coming into play at (1). The jury is still out in regards to the potential head & shoulders pattern, as it is far from proven!

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If dual support (the neckline) would happen to give way at (1), it would increase the odds that rates have hit a short-term high, which hard hit bond bulls would love to see.

 

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