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Let me be clear, the long-term trend in rates at this time is lower. When one looks at yields since the highs back in the early 1980’s, for sure the big picture trend is down.
Did you know that interest rates have risen 19% of late? Does a 19% rise in yields on the 10-year note mean a major shift is at hand? Too soon to tell, so lets dig a little closer.
The left chart reflects that the yield on the 10-year note recently hit the bottom of its rising channel and several other support lines at (1). Since then the yield on the 10-year note has risen 19% off the lows. Could a new “shift” in rates be at hand?
Lets now take a peak at Corporate bond ETF (LQD). As you can see the rally over the past 18-months took LQD to the top of this rising channel and back to all-time highs at (2). Once LQD hit these resistance points, it has fallen around 3% recently.
The bounce in yields off support at (1) and the decline in LDQ after hitting (2) does NOT prove a new shift in rates is at hand. I did share a month ago, before the latest move higher in rates/lower in prices, “10 Reasons rates could reverse and head higher”
If rates should rise, humbly I do feel they could impact the stock market, especially if a real “shift” is at hand and they move up higher than expected.