Many of the talking heads in financial media continue to say that yields on the 10-year U.S. Treasury Note ($TNX) cannot and will not trade above the 2.60 percent level. It should be noted that the 2.60 percent level has been resistance since December 2016. The support level on the yield chart since that time has been 2.30 percent. Currently, the 10-year U.S. Treasury Note yield is hovering around 2.37 percent level. Many traders and investors are thinking that yields are going to fall further, but all that’s happening on the chart is long term consolidation. The high range of the chart consolidation range is 2.60 percent and the low end of the range is 2.30 percent..
If traders look at a monthly yield chart they will see a nice tight consolidation pattern. Should this pattern on the monthly chart play out as expected it signals a move in the 10-year U.S. Treasury Note yield to around 2.82% and possibly higher. The same pattern is also forming on the 30-year U.S. Treasury Note yield ($TYX). This monthly chart pattern signals a move to the 3.43 percent level and possibly more. The bottom line is that yields are poised to move higher very soon.
There are a few ways to play bond yields as a stock trader. One way to trade the 10-year U.S. Treasury Note yield is to play the ProShares UltraShort 7-10 Year Treasury (NYSEARCA:PST). This ETF will track the yield chart on the 10-Year Treasury. If traders are looking to trade the 30-year U.S. Treasury Note yield they can play the ProShares UltraShort 20+ Year Treasury (NYSEARCA:TBT).