Long-term Treasury yields are headed higher
The bear case for long-duration bonds is driven by an expected rise in long-term yields, potentially targeting over 5% if key technical resistance is broken.
The argument
The guest argued that the bond market is in a six-year cycle and has not priced in the potential elimination of forward guidance or dot plots under a new Fed chair. He expects a massive supply of debt will need to be absorbed, pushing the 10-year yield past its $4.60 technical resistance level.
The thesis, stress-tested
✓ What validates it
- ✓10-year Treasury yield breaking above the $4.60 technical resistance level
- ✓Official confirmation of Kevin Warsh as Fed Chair and subsequent moves to eliminate forward guidance
▸ Risks discussed
- ▸The administration shifting issuance heavily to the short end to suppress long-term yields
- ▸Economic data weakening significantly, forcing yields lower
Hear it yourself
"So if it happens very dramatically and we start to really accelerate, then then certainly the equity market would be spooked. And and if it that that happens, $4.60 is a big level for the ten year treasury based on just triangle type technical resistance."
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