Economic Warnings From The Yield Curve
The 30-Year yield has been below its 200-week simple moving average or ‘reversion to the mean’ since the week of March 24 when this average was 3.05%.
The weekly chart ended last week with a downgrade that favors higher bond yields. The yield on the 30-Year bond is above its five-week modified moving average of 2.788% and below its 200-week simple moving average of 2.875%. The 12x3x3 weekly slow stochastic rose to 33.61 last week, up from 30.71 on Dec. 29.
Trading Strategy: My value level for 2018 is well above the market at 4.065% which indicates that yields are vulnerable to rise significantly. My monthly and quarterly risky levels are 2.683% and 2.428%, respectively.