Bonds are looking Dodgy

Positive economic news this week has pushed interest rates to a key pivot point.  GDP growth of 3.6% and over 200,000 new jobs added in November has rates on the 10 yr Note testing some longer term trendlines.

The Daily charts show the resolution of the possible Head & Shoulders pattern by the breakout above 2.75%.  This ought to prove strong support on any backtest.  A stop below the 50 day ema will limit any losses.  The MACD  suggests a move above 3.0% is probable which would be a new recent high in rates.

A break above 3% would snap a 3 year trendline.  The weekly indicators show plenty of room to support a breakout.  Should rates crack 3.0% 3.5% will be the next target.

The eight year chart shows the significance of the 3.0% mark.  A move above 3.0% would be a breakout of an seven year trendline.  Once again, the indicators are supportive of such a move with the STO bouncing of 20.  

Should the 3.0% level snap, the next resistance is at 3.5%. Good support is evident at the 50 month ema of 2.53%.  The implications of breaking 3.5% are not good for rates.  3.5% is the current breakout point of a 20 year trend in consistently lower interest rates.  There are 2 main possible reasons that rates might break 3.5%.  The favorable reason for a break above 3.5% would be continued economic growth.  This would be a bullish outcome for the economy.  The other reason for rates to rise would be failed monetary policy.  This would have very bearish consequences for the economy.