Upward Bound

Man we were killing time
We were young and restless
We needed to unwind
I guess nothing can last forever, forever-no
--Bryan Adams

Interesting multiyear inverse head and shoulders pattern being perfected on 10 year yields (TNX). Chance favors upside resolution to this pattern, which means higher yields.

Hoofy argues that it's all good, bro. Interest rates typically rise in anticipation of stronger economic activity.

Boo counters that the US (and world) is as leveraged as ever, and high yields are no friend when you're drowning in debt.

There is also thought that bonds are responding to increased supply emanating from Sovereign bailouts (looks like Portugal is up next), and tough talk between Obama administration and China re letting the yuan rise.

On the latter point, a cautionary 'be careful for what you wish' seems appropriate.

In any event, a decisive move above 4% (TNX 40) suggest that, technically, we may be off to the races.

Something to watch, as the Fed can't buy the entire curve...

no positions