Published 15th February 2018 & validated 13th March 2018
The question is not if rates increase but rather when rates increase. We think rates will rise eventually. However, it will most likely take much longer than most people think right now!
Short-Term 10y US Government Bond Elliott Wave Analysis
Published 13th March 2018
The US 10y treasury yield appears to have traced out a contracting diagonal as a fifth wave. Subsequent wave action could be very well the start of a minute degree leading diagonal to the downside. This is our base case as long as the 2.96% yield is not crossed to the upside short term.
Alternatively, we could see another spike up in order to finish the current wave up.
Mid-Term 10y US Government Bond Elliott Wave Analysis
Published 15th February
The medium-term 10y Elliott wave structure is ambiguous. It can be counted as a double zig-zag or as an impulse to the upside. However, both versions imply a reversal coming within the next few weeks, which will most likely result in lower yields than today. Ultimately the reversal will tell if we are dealing with a correction or the final Elliott wave of a secular bull market.
However, the double zig-zag scenario as intermediate wave (4) is off the table if 10y treasury yields hit 2.98%. In that case, we have most likely seen a multi-decade treasury yield low in 2016.
We’ve come extremely close to the level, which invalidates the black count. This shifts odds to the red count medium term.
10y US Government Bond Yield Long-Term
Published 15th February 2018
The US 10y treasury yield looks like a 3-wave trend down since the 80’s. Our view is that the interest rate downside trend is about to finish in the next few years. Alternatively, it ended in 2016 already. Both scenarios show a contracting diagonal, which is typical for a terminal structure ahead of a trend change.
Our red label is slightly more likely as we publish this. The entire case for our 10y Elliott wave interpretation depicted within black is invalid if treasury yields exceed 2.98%. Either or scenario, rates will eventually rise. However, it will most likely take longer than most people think!