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Chart In Focus

Upturn Ahead for T-Bond Yields

Chart In Focus
July 10, 2019

I like getting answers ahead of time, and I really like chart pattern leading indications like the one in this week’s chart which can give us useful answers about what lies ahead.  The movements in crude oil prices tend to show up again about 3 weeks later in the movements of bond yields, with the dance steps getting repeated.

Sometimes the Treasury Yield Index (TYX) does its own artistic interpretation of those dance steps.  And sometimes it goes completely off script for a while, but then works extra hard to get back on track with what crude oil says should have been happening.  It is not a perfect leading indication; it is merely very good.

Crude oil prices bottomed back on June 12, and so that should have meant a bottom for the TYX ideally on July 5.  It actually bottomed one trading day early on July 3.  Close enough to the target, for a rifle shot fired 3 weeks before.

The rally in crude oil prices since June 12 should now see its echo in rising bond yields over the next 3 weeks, and especially over about the next week and a half.

Tom McClellan
Editor, The McClellan Market Report

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