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The U.S. Treasury 10-Year Yield Is On The Rise. Here’s How To Trade It.

The yield on the United States 10 Year Benchmark (US10YT=55) has been rising along its 200-day simple moving average since July 21. The 52-week high for the 10-year yield was 1.776% set on March 30. The subsequent low yield of 1.127% was set on August 4. The 200-day simple moving average for this yield has been a magnet between July 21 and September 23.

For those who don’t know me, I was a U.S. Treasury Note and Bond trader between 1972 and 1999. Since the beginning of 2000, my focus shifted to the stock market, but I always track the yields along the U.S. Treasury yield curve.

The Daily Chart for the 10-Year Yield

The daily chart for the 10-Year Yield shows a golden cross formation confirmed on November 24, 2020. This occurred when the 50-day simple moving average for this yield rose above the 200-day simple moving average. This signaled the rise in yield from 0.8848% to the 52-week high yield of 1.776% set on March 30, 2021.

From this high yield there was a bond market rally that pulled this yield down to as low as 1.127% set on August 4. The semiannual pivot for the 10-Year Yield at 1.34% was a magnet between July 7 and September 23. So far this week the higher yield has been a drag on the stock market.

The Weekly Chart for 10-Year Yield

The weekly chart for the 10-Year Yield favors higher yields. The 10-Year Yield is above its five-week modified moving average at 1.3947%. The upside target for this yield is the 200-week simple moving average or reversion to the mean at 1.8723%. The 12x3x3 weekly slow Stochastic reading is rising at 60.60 which favors a higher yield.

Trading Strategy: Buy a rising yield scenario on weakness to the 200-day simple moving average at 1.378%. Reduce the call for a rising yield environment as this yield rises to the 200-week simple moving average at 1.8723.

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