Huge, historical bond move is upon us: Technician
Alex Rosenberg | @CNBCAlex
CNBC.com
Treasury yields have risen sharply over the past two months. And according to technician Craig Johnson of Piper Jaffray, the real move in rates is just getting started.
“This will be the big, new secular rising rate environment in the U.S., and it is something a lot of investors haven’t seen, and it is something we need to pay very close attention to,” Johnson said.
To him, the path forward for rates makes itself obvious on a long-term chart. Examining a ten-year chart of the 10-year US Treasury yield, Johnson espies a “big, inverted head and shoulders bottoming pattern.”
“The last time I’ve seen a pattern this big was back in 2009,” he said Friday in a “Trading Nation” interview.
By this technican’s work, the consequent move higher in rates could be quite significant.
“If this bottoming pattern breaks above 2.70 [percent], you’ve got a neckline break on this, you can measure it out to over 4 percent,” Johnson said. “10-year bond yields will probably take about five to six years to get there, but this is the start of a new secular uptrend.”
Zachary Karabell, head of global strategy for Envestnet, points out, however, that even a 4 percent 10-year yield is pretty low in a long-run historical context.
“Going from 2.40 to 2.50 to close to 4 in five to seven years—I’m not really sure it really qualifies as a change in a 30-year secular downtrend,’ he said. “I think we are more likely to be in a world where sub-4-percent, maybe even sub-3-percent long-term rates are kind of the new normal.”
Even if rates rise to 4 percent, then, the spell of low rates shouldn’t necessarily be considered broken.
Today’s Inspiration
We Want the Real Thing
by Joyce Meyer – posted June 15, 2015
I am speaking the truth in Christ. I am not lying; my conscience [enlightened and prompted] by the Holy Spirit bearing witness with me . . . Romans 9:1
Nobody likes being tricked. We don’t like false advertising, phony small-talk, or fake relationships. In our world, people often put on a plastic smile and tell everyone they’re doing fine while inside they’re falling apart. It’s all an illusion.
As Christians we often believe we should feel better than we do or that it is wrong to feel the way we do, so we hide our feelings from everyone. Sometimes we try to hide the way we really feel from ourselves. We pretend to have faith while we’re full of doubt. We pretend to be happy while we are miserable; and we pretend to be in control and have it all together, but at home behind closed doors, we are totally different people. We don’t want to admit that we are living phony lives, so we stay busy enough that we never have to deal with things as they really are. We may even bury ourselves in church work or spiritual activity as a way of hiding from God. He is trying to show us truth, but we would rather work for Him than listen to Him.
God just wants us to be honest and real. Don’t fall into the trap of thinking all your feelings are wrong. Being a person of faith does not mean you will never have negative or ungodly feelings. We will experience feelings that need to be dealt with, but we can always exercise our faith in God and ask Him to help us to not allow our feelings to control us. The Bible says we live by faith and not by sight (see 2 Corinthians 5:7). That means we don’t make decisions based on what we see or feel, but according to our faith in God and His promises to us.
Trust in Him You need to trust that the real you, even on your worst day, is better than being fake or phony. Make the choice today to be honest, genuine, and authentic with God and with all the people in your life.