The 07/26/23 blog “Money Goes Where it is Treated Best” noted that the FOMC raising short-term interest rates could cause stock fund managers to sell stocks in favor of a nearly risk-free return. A rise in long-term interest rates/yields could be averse to stocks.
The 07/08/23 blog “Examination of Long and Short-Term Interest Rates” illustrated the Elliott wave count for the 30- Year U.S. Treasury Yield (TYX). The daily TYX chart courtesy of Trading View shows the updated wave count.
Today 07/27/23 TYX climbed 3.31% and appears to be in Minor wave “3” up of Intermediate wave (5). If so, in one or two weeks TYX could soon rise above its bull market peak made in October 2022. Rising long -term rates means higher mortgage rates making real estate purchases more expensive. Higher rates also make stock margin purchases more expensive.
Momentum Oscillators support the theory of TYX rising. MACD has a bullish lines cross. RSI has moved above its moving average line and it has yet to reach the overbought zone above 70%.
The sharp rise in TYX today was in conjunction with a sharp drop in U.S. stocks. Its possible this relationship could continue for several weeks.
Four Dimension Trading 