Up Escalator

Now - the mist across the windows hides the lines
But nothing hides the color of the lights that shine
Electricity so fine
Look and dry your eyes
--Joe Jackson

Bonds have been getting sold. Although not huge in absolute terms, 10 yr yields have risen nearly 20% since early December. From where I sit, the technical picture suggests higher rates, as a multiyear downtrend appears may be reversing. Moreover, the pattern has a reverse head and shoulders-ish look to it.

It goes without saying that higher rates are a negative for an economy dependent on stimulus and credit.

What might be moving this market? Another $trillion spending bill, raising of the debt ceiling, and Senate passage of the health care bill for starters. All of these suggest more credit demand by the gov't, and lenders are raising the price. It's also hard not to view these initiatives as inflationary.

A move above TNX 40 (4% 10 yr yield) will likely grab significant attention.

position in USD