Bond Ghouls Cometh?

Here comes the rain again
Falling on my head like a memory
Falling on my head like a new emotion
--Eurythmics

With attention focused on whether stocks would follow-thru after their FOMC celebration, long bond yields ripped higher yesterday.  Ten yr Treasury yields jumped 6.5%.

TNX has now pierced resistance defined by both the 200 day moving average and the mid Aug near term highs. The daily chart also looks cup and handle-ish.

In fact, this set-up (coupled with the macro money printing picture) makes it tempting to take a swipe at shorting bonds here.

Bulls argue that this is healthy action--merely money rotating out of govies into riskier assets. Bears counter that the Fed's stated intention to print gobs of money awakens bond vigilantes from a deep slumber, and that leveraged systems can't tolerate big jumps in rates.

Technically, next definable resistance is up at about 2%, where there is an early April gap waiting to be filled.

This situation helps define the corner that the Fed has painted itself into. It wants to print money and thinks it can do so while still keeping bond yields low (by buying bonds with much of that money). However, if other bond holders get spooked, then the only way the Fed can keep those rates lower is to buy them all.

By then, it will be impossible to put the inflation genie back in the bottle.

position in SPX