Friday, February 18, 2011

Benchmarket Interest Rates

In the old Quick Takes format, here is why I think the 10-year is going to 4% in no time on its way to a real breakout.

2 comments:

ed15bb68-3b9d-11e0-b91c-000bcdcb5194 said...

"Technical analysis is a wind sock, not a crystal ball."
- Carl Swenlin

It was my understanding that technicians are not supposed to speculate on the break of a trendline, before it is even being tested. Especially in the case of a trendline that has been in place for 30 years!

We are taught to respect trendlines as likely areas of either difficulty or even outright reversal. In fact, if you were treating this line in this manner at any time in the last 30 years, you could have written this many times over and been wrong each time.

Why are you so confident now that this trendline, which isn't even actually being tested yet, is made out of oragami and is "destined" to be trampled? Technical analysis is evidence-based analysis of what is going on, not some crack prediction on a whim of what "will" happen.

Paul O'Cuana said...

You're right it does look compelling. As a bond bull it should set up a nice buying opportunity.
My reasons are all fundamental.
Maybe I'm just jaded from living here in Florida, but there appears to be huge headwinds in the economy. We're entering a period of austerity at the local, state and federal level. And the housing situation is making the 80% of the population that doesn't own stocks feel pretty poor.