Touch Three

Come on, come on, come on, come on now
Touch me, babe
Can't you see
That I am not afraid
--The Doors

Continuing our yield watch, 10 yr yields briefly touched 3.03% this morning and marked four year highs before pulling back below the three percent maginot.

On a multi-year chart, 10 yr yields can be seen as tracing out a large inverse head-and-shoulders pattern. This is bullish for yields but bearish for the bond prices. Also bearish for an over-leveraged economy dependent on perpetually low rates.

When higher rates begin to 'matter' is anyone's guess. Because the charts are suggesting that yields want to go higher yet, it seems likely that the issue will arise sooner rather than later.

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