10YR Treasury to Resume Rise Post-Fed

27 Eki 2023

The 10yr has taken a break in the past couple days off it's highs. This is normal but and happens regularly in the relentless overall path upwards in rates. The Fed has made all the signals that they are blind to the supply and demand issues of treasuries and willing to allow the market to do what it will as long as it results in less inflation. Chairman Powell in his September 26th speech stated that he still does not believe rates are restrictive enough and with a 4.9% GDP - although questionable at best - he will likely continue his hawkish tone in the November 1st meeting. Once the market realizes there will be another period in which no help is coming - along with a massive issuance of treasuries coming in November and in the line up for 2024 - rates will continue to rise into the end of the year. Target is 5.5% by EOY. I expect it to be choppy, but we won't be stopping here at 5%.

We broke about the blue horizontal line which is a Gann fan dating back to 1982's peak in rates. This is the first time in 40 years we've risen above this line and we've stayed over it. The pace higher will continue until something breaks or the Fed changes tone on their QT policy.

No one wants our treasuries - Japan, China, etc. The Fed isn't buying and Yellen keeps adding billions more to the market weekly. Important dates are November 8th and 9th where the 10 year and 30 year auctions take place. A bad auction could be the onset of the rise if the Fed doesn't provide that on Nov 1.