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During the 3rd quarter of this year, we saw the 10-year treasury bond yield reach its highest level in nearly 15 years.
This corresponded with mortgage rates reaching levels we hadn’t seen in some time. And all this is occurring while the Federal Reserve raises interest rates to cool record inflation.
So is there any good news here? Well, today’s quarterly chart of the 10-year treasury bond yield highlights the long-term downtrend that interest rates had been in. It also shows just how extreme the rally over the past two years has been.
10-Year Treasury Yield Quarterly Chart
When we look closer at the chart, we can see a few bearish reversals that left long wicks at each (1). This is important because last quarter, we saw another long-wicked bearish reversal at (2). All of the prior reversals lead to big drops in the interest rate. It could happen here too.
As well, when we apply Fibonacci to the all-time high and low in interest rates, we can see that the 10-year yield tested the first common fib retracement level this past quarter – 23.6%. And it stopped on a dime and reversed lower.
This is an important area to watch. If this reversal holds, consumers may see lower interest rates in the future. Stay tuned.