Bullish Technical Indicators for Treasuries

Bond technicals are all bullish, pointing to continued declines in rates. First, let's take a simple look at the 10-year Treasury linked yield.

10-Year Treasury Linked Yield Source: Bloomberg View Chart »

We see in the October-December 2010 time period, a gap formed between the 2.39% low in yield shortly after QE2 was announced and the 3.53% level hit as the Bush tax rates were extended. Since stabilizing in the 3.30% to 3.60% area during the first quarter, we've now established a very clear downward trend in yields. I've drawn two trend lines tracking the downward channel. It isn't perfect, but even if you picked different spots as your highs and lows, you get the same conclusion: We've broken the trend to the downside over the past two days. My best estimation is that we're likely to explore the 2.40% area....247 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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