10-YEAR TREASURY YIELD IS NEARING SOME OVERHEAD RESISTANCE BARRIERS
POTENTIAL BOND YIELD RESISTANCE...The recent upmove in bond yields is attracting the attention of bond and stock holders. It's obviously negative for bond prices. But it could lead to some selling of stocks if bond yields were to climb too far too fast. So let's take a look at some potential overhead resistance levels in bond yields where the current advance might start to stall. The weekly bars in Chart 1 show the 10-Year Treasury yield touching 1.30% for the first time in a year. The previous congestion area to the left of the chart formed during 2019 offers a couple of potential overhead resistance levels. The first one is at lower end of the 2019 trading range between 1.42% and at 1.51% (red circle). That could offer some resistance to the current price advance. The upper end of the range is at 1.97% which could provide more resistance if the TNX gets that far. A longer range look at the chart, however, provides another perspective.

LONGER-TERM RESISTANCE... The weekly bars in Chart 2 offer another shelf of potential resistance starting at 1.33% which was the low formed during the summer of 2016 (red circle). That's not too far above the current level of 1.30%. In chartwork, previous lows that have been broken on the downside often provide resistance on the way up. That's why we're focusing on previous lows in this analysis. There's one more trough to look at.
TEN-YEAR CHART...The weekly bars in Chart 3 show another potential shelf of resistance formed by a low in bond yields formed during 2012 starting at 1.39%. That's the first red circle on the chart. Putting the three circles together over those ten years suggests a range of potential overhead resistance starting at 1.33% formed during 2016 to 1.39% during 2012 to 1.42% formed during 2019. The TNX would need to clear that resistance range to signal a more substantive advance. If it does, the next test of overhead resistance would come closer to 2.00%.

