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Interest Rates And Banks Are At Critical Inflection Points

Published 08/30/2019, 12:08 PM
Updated 07/09/2023, 06:31 AM
US2YT=X
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US5YT=X
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US10YT=X
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BKX
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U.S. Treasury Bond Yields And The KBW Nasdaq Bank Index

Over the past 5 weeks, 10-Year yields have declined 26%, 5-year yields are down 24% and the 2 year is down 17%. Are more yield declines ahead?

The question is, how would stocks react if yields rally off support? Would banks start reflecting relative strength if yields rally here?

This chart shows that recent swift declines have 2-, 5- and 10-year yields testing 7-year support at each (1).

As yields are testing long-term support, the Bank Index (BKX) is doing the same thing (lower right chart).

Stocks in the states and around the world are hopeful that yields and banks rally off these long-term support levels.

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