An early-week equity rebound has given way to renewed caution as investors weigh shifting Energy prices, rising Treasury yields, and geopolitical developments. Falling Oil prices and stabilising yields initially supported equities, but that momentum faded as yields resumed their climb. Reports of potential renewed US military strikes against Iran subsequently added pressure to equities and lifted Energy prices, overshadowing encouraging earnings results from PepsiCo.
Against this backdrop, long-term borrowing costs remain an important area of focus. The Federal Reserve raised rates in September for the first time in three years and signalled that further tightening could follow, while the 30-year fixed mortgage rate has risen to 7.03%. Companies reliant on debt also face higher borrowing costs, adding another consideration as investors assess the earnings outlook.
These connections do not mean that every asset class will move in step with yields. They do, however, make the long end of the curve worth watching as markets assess the path of inflation, monetary policy, and the durability of the equity rebound. SIA’s technical readings offer two views of that market: one focused on the US 10-Year Yield and the other on the US 30-Year Yield.
CBOE Interest Rate 10 Yr
Treasury yields extended their sharp September advance. At the time of writing, the US 30-Year Yield had climbed above 5.69% for the first time since June 2002, while the US 10-Year Yield had topped 5.31%. Persistent inflation concerns, fuelled by rising Oil prices, reinforced expectations that further Federal Reserve rate hikes could follow.
The CBOE Interest Rate 10-Year T-Note Index (TNX.I) offers a direct reading of long-term US borrowing costs by tracking the yield on the most recently auctioned 10-year Treasury note. It tracks the yield itself rather than the price of a bond or bond fund, so it moves inversely to the underlying Treasury note’s price.
TNX.I currently holds an SIA SMAX score of 10 out of 10, and its most recent point & figure chart signal is a Spread Double Top. Initial support is identified at 48.17 on a 3-box reversal, followed by 41.93 and 35.79. On the upside, resistance lies at 56.44 and then 61.09.
CBOE Interest Rate 30 Yr
The CBOE Interest Rate 30-Year T-Bond Index (TYX.I) tracks the yield on the most recently auctioned 30-year US Treasury bond. Sitting at the long end of the curve, it is sensitive to expectations for long-run inflation, growth, and federal borrowing, with a less direct connection to near-term central bank policy. Compared with the 10-year reading, it also offers a view of the slope of the long end of the yield curve.
With the US 30-Year Yield reaching a 24-year high, TYX.I currently holds an SIA SMAX score of 10 out of 10. Its most recent point & figure chart signal is a Spread Double Top.
Near-term support is identified at 45.02 on a three-box reversal, followed by 38.89 and 33.59. Resistance lies at 57.46, with the next level at 69.84 dating back to 2001.
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