TheTechnicalTake: TLT

It is my belief that we have seen the high in long term Treasury yields at least for a while, and I expressed this opinion in yesterday's article on Treasury yields.  Today, I thought it would be instructive to look at the bullish technical patterns developing in the i - Shares Lehman 20 plus Year Treasury Fund (symbol: TLT).

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Long Term Treasury Yields: Heading Lower

Lost in all the noise about crude oil this week and its effect on the economic recovery (i.e., the equity rally) has been the top in Treasury yields.  This article will cover the technical aspects of the Ultra Short Lehman 20 plus Year Treasury Fund (symbol: TBT).

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TheTechnicalTake: TBT

I would describe the current price action in the equity market as meaningless.  It doesn't impart any information to me as the dip is always bought albeit on persistently shorter and shorter time frames.  On the other hand, long term Treasury yields are on the rise and breaking out from their current trading range.  Rising yields will be a headwind for equities, and are likely a sign of inflation worries.

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TheTechnicalTake: TBT

I have been highlighting higher Treasury yields since October 15 (well before the heard), and I also mentioned on December 8 that the move higher in Treasury yields would "pick up steam".  But every price move has its limits, and the Ultra Short Lehman 20+ Year Treasury (symbol: TBT) is no different.

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TheTechnicalTake: TLT

The move higher in long term Treasury yields, that I first started to write about on October 15, 2010, is beginning to pick up steam.  This can be seen in figure 1, a daily chart of the i-Shares Lehman 20 + year Bond Fund (symbol: TLT).  

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Rising Yields Are Both Good and Bad for Equities

Rising long term Treasury yields can be viewed as a sign that the economic recovery is taking hold.  That is one interpretation.  Another is that rising yields will serve to pressure equities and choke off any rally that may develop.  I believe the latter scenario will eventually predominate as there is a limit to how high equity prices can rise in these liquidity fueled rallies.

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