InvestedCentral
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The yield on the 10 year treasury has been moving in unison with the S&P 500:
The yield on the 10 year treasury actually began to move higher late in 2008, just before the S&P 500 bottomed. Recently, the S&P 500 made a run beyond the 1130 area, well above recent lows near 1040. The yield on the 10 year treasury, however, is now threatening a long-term breakdown below critical 3.10%-3.15% support. This suggests that money is currently flowing into bonds, as the price of the 10 year treasury and its yield move inversely to one another. The inflow into bonds generally coincides with outflows from the equity market. Investment in bonds suggests that investors are not willing to take the risks necessary to push equity prices higher. Thus, a strengthening bond market usually means a declining stock market. That's why the current test of support on the yield is critically important to equities. It appears as though the treasury yields could once again be a leading indicator for equities. As a result, watch the yields closely, realizing that a breakdown in the yield will most likely portend further weakness in equities.
The yield on the 10 year treasury actually began to move higher late in 2008, just before the S&P 500 bottomed. Recently, the S&P 500 made a run beyond the 1130 area, well above recent lows near 1040. The yield on the 10 year treasury, however, is now threatening a long-term breakdown below critical 3.10%-3.15% support. This suggests that money is currently flowing into bonds, as the price of the 10 year treasury and its yield move inversely to one another. The inflow into bonds generally coincides with outflows from the equity market. Investment in bonds suggests that investors are not willing to take the risks necessary to push equity prices higher. Thus, a strengthening bond market usually means a declining stock market. That's why the current test of support on the yield is critically important to equities. It appears as though the treasury yields could once again be a leading indicator for equities. As a result, watch the yields closely, realizing that a breakdown in the yield will most likely portend further weakness in equities.