BOND YIELDS CONTINUE TO CLIMB -- THAT'S HELPING BANK STOCKS

TEN-YEAR YIELD EXTENDS UPTREND... The uptrend in bond yields is continuing.   The daily bars in Chart 1 show the 10-Year Treasury yield touching a new recovery high in today's trading.    That puts the TNX at the highest level since last March.  The horizontal line in Chart 2 shows its March high at 1.26% which is its next upside target.   The 30-Year Treasury yield has already cleared its spring high and has reached 2.00%.   That signals more upside to come for longer maturity bond yields.   That means that bond prices are continuing their downtrend.  Rising yields are helping make financial stocks one of the day's strongest sectors with help from bank stocks.

BANK SPDR NEARS NEW RECORD... The weekly bars in Chart 3 show the S&P Bank SPDR (KBE) rising above a falling trendline drawn over its 2018-2019 highs and nearing a test of its previous high formed three years ago.  That's an encouraging picture.  Its relative performance is also nearing an important test.

IMPROVING RELATIVE PERFORMANCE...Chart 4 plots a relative strength ratio of the KBE divided by the S&P 500 over the same period.   It shows the ratio still in a long-term downtrend but rebounding over the past three months.   The most important part of the chart is the falling trendline drawn over its 2018-2019 peaks.   The ratio is nearing a test of that falling resistance line.   The chart shows how cheap bank stocks are relative to the rest of the market.   But that may be changing for the better.   Especially if that falling trendline is exceeded.