Prepare Yourself For Much Higher Long-Term Interest Rates

(Click on image to enlarge)

The weekly closing yield of the US 10-Year Treasury Note highlighted with key historical levels.

The weekly closing yield of the US 10-Year Treasury Note since 2012.

 COPYRIGHT 2021 ASBURY RESEARCH LLC

 

More important, the chart shows that very formidable overhead yield resistance at 1.37% to 1.47%, which represents the July 2012, July 2016, and Aug 2019 lows, has just been broken by higher yields. When previous benchmark levels like this are broken, it typically leads to a lot more strength and at least a test of the next key level on the chart — which in this case is at 1.70%.

The 1.70% level is being tested now, and may be in the process of being broken to the upside. If this is indeed the case, it would clear the way for a test of the next overhead yield level at 2.05% which represents the September 2017 benchmark low. Equally important is that the 1.47% to 1.37% area now becomes primary underlying yield support, which means it should become the floor for the next big move higher in long-term US interest rates.

US 10-Year Treasury Yields Over The Past Century

Chart 2 below plots the monthly closing yield of the US 10-Year Treasury Note since 1900. The red highlights show that the 1.37% to 1.47% yield area also includes the November 1945 lows that were set two months after the end of World War II, making this level even more important.  The historical importance of 1.37% to 1.47% is why we believe the current move to 1.73% is so significant, and why the 1.37% to 1.47% area is likely to become the launching pad for a much bigger move higher.

(Click on image to enlarge)

The monthly closing yield of the US 10-Year Treasury Note highlighted with key historical levels.

The monthly closing yield of the US 10-Year Treasury Note since 1900.

 COPYRIGHT 2021 ASBURY RESEARCH LLC

This very long-term chart also shows that, above 1.46% to 1.55%, the next significant overhead level is at 3.00% to 3.35% — almost double Friday’s closing yield. Although a 3.00% 10-year yield may be hard for some to wrap their head around, the blue highlights on the chart show that the US 10-Year average monthly yield since 1900 is 4.55%. And, as an older American who purchased his first home in 1988 with a 30-year fixed mortgage of around 11.0%, a 4.55% 10-Year yield does not seem that far-fetched.

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