In March of 2020 the U.S. 10 Year Treasury Note made a major top. The subsequent decline lasted more than three years. The rally from October 2023 to September 2024 has the characteristics of a bounce within a still developing secular bear market. The move down from the September 2024 peak could be the start of at least a multi- month decline.
This website has focused primarily on U.S. government interest rates which move inversely to bond prices. An examination of bond prices, in particular the U.S. 10 Year Treasury Note gives a different perspective on the possibility of rising long-term interest rates.
The weekly U.S. 10 Year Treasury Note Continuous Futures chart (ZN1!) courtesy of Trading View examines the action since the major top made in March 2020.
The decline from March 2020 to October 2023 took the form of an Elliott five – wave Impulse pattern. The subsequent rally from October 2023 to September 2024 was an Elliott wave – Single Zigzag correcting the prior three year down progress. If the corrective pattern is complete it implies prices could be in a new bear phase that could last for months or years.
An examination of the Ichimoku Cloud provides powerful evidence. Note that in February 2021 the price broke below the cloud and stayed below until July 2024. The upside break out could have been signaling the start of a bull phase lasting at least several months. However, prices broke back again below the cloud. There was another upside break-out in November which also failed. The Bond bulls had their chance, and they blew it!
The latest downside break-out could be just the start of a new multi-month decline.
Both lines of weekly Stochastic have reached the oversold zone which starts at 20.00. Note that from March to June 2022, and again from July to October 2023 Stochastic remained in the oversold zone for several weeks.
Weekly RSI has yet to reach the oversold zone which begins at 30.00. Both MACD lines are marginally below the zero level and have room to fall significantly lower.
The message from the U.S. 10 Year Treasury Note – momentum and price indicators strongly implies falling prices months into 2025, and correspondingly rising long-term interest rates.
Recently U.S. stocks sold off sharply on the prospect of the U.S. – FOMC only cutting short-term interest rate twice in 2025. If stock traders are bearish on minimal rate cuts perhaps they could be even more bearish on persistently rising long-term interest rates.
Happy New Year.
Four Dimension Trading 