The yield on the 10-Year US Treasury appears headed for a test of my quarterly risky level at 2.495. Gold appears headed for a test of my semiannual pivot at $1218.7 with crude oil showing a daily value level at $71.22. The euro is trending below its 50-day simple moving average at 1.2745 with my quarterly value level at 1.2167. For the Dow I show just a minor weekly value level at 10,035. Dow 8,500 could come as early as October unless we end August above the annual pivot at 10,379.
10-Year Note – (2.605) My annual pivot is 2.813 with weekly and daily pivots at 2.574 and 2.570. My annual value level is 2.999 with quarterly and semiannual risky levels at 2.495 and 2.249. Note that the decline in yield is extremely overdone. (Click to enlarge)
Courtesy of Thomson / Reuters
Comex Gold – ($1227.7) Weekly, quarterly, monthly and annual value levels are $1159.5, $1140.9, $1133.2 and $1115.2 with my semiannual pivot at $1218.7, and daily and semiannual risky levels at $1253.3 and $1260.8. Note that gold is overbought on its daily chart.
Courtesy of Thomson / Reuters
Nymex Crude Oil – ($72.91) My daily value level is $71.22 with weekly and annual pivots at $73.59 and $77.05. My monthly and semiannual risky levels are $80.02 and $83.94. My quarterly value level is $56.63. Note that crude oil has become oversold on its daily chart.
Courtesy of Thomson / Reuters
The Euro – (1.2662) Quarterly and monthly value levels are 1.2167, 1.1486 and 1.1424 with a daily pivot at 1.2706, and weekly and semiannual risky levels at 1.3276 and 1.4733. Note that the euro is oversold on its daily chart.
Courtesy of Thomson / Reuters
Daily Dow: (10,174) My quarterly value level is 7,812 with a daily pivot at 10,195, and weekly and annual pivots at 10,358 and 10,379, and monthly, semiannual and annual risky levels at 10,439, 10,558 and 11,235. My annual risky level at 11,235 was tested at the April 26th high of 11,258.01. Note that the Dow is below 21-day, 50-day and 200-day simple moving averages at 10,473, 10,302 and 10,455.
Courtesy of Thomson / Reuters
Fears of Deflation are Driving US Treasury Yields Lower
Being long gold as a deflation hedge is a crowded trade, and if you own gold bars you have the monthly cost of storage and insurance. The 10-Year US Treasury, on the other hand, pays you semiannual interest payments. All year long most Wall Street analysts have been suggesting selling US Treasuries saying yields are too low. I don’t argue the point that yields are too low with quarterly and semiannual risky levels at 2.495 and 2.249. Let’s say that over the next ten years the average prices of goods and services drops 10%. Given 10% deflation over the next ten years the set principal on the maturing 10-Year gives the holder additional buying power.
A reader asked about the 30-Year US Treasury – At 3.669 at Monday’s close there are annual risky levels at 3.582 and 3.523 as a barrier at which to consider profit-taking.
Disclosure: No positions
