US yields are not buying the flight to safety storyline

Technical Analysis

Author: Greg Michalowski | yields

Stocks lower by yields higher

The US stocks are heading lower with the Nasdaq index down -2.79% and the S&P index down -2.03%. However, looking at the debt market, there is no corresponding flight into the relative safety of the US debt. 

Stocks lower by yields higher
It may be month end flows. It may be that a Biden/Dem blue wave will lead to an even greater surge in the deficit with more debt issuance?  It may be overreaction by the stocks after the better earnings, but some concerns about future growth from Covid uncertainty?   It may be some other force at work that will play out over time, but the disconnect is evident.

Looking at the daily chart of the 10 year yield, the yield level is now above the 200 day MA at 0.8337%. The yield moved above the MA line last week with the move to 0.8699% but that break failed. Today, the yield is above the falling MA line again but still below the high from last Friday at the 0.8699% level.  Stay above would have traders targeting the 0.9389% level (38.2%) .  The last time the yield closed above its 200 day MA was back on December 4, 2018.  That's a long time ago. 

Meanwhile the Dow is moving below its 200 day MA at 26198.83. The low price just reached 26161.46. The Nasdaq index has moved below its 100 day MA at  10891.63. The low price reached 10867.374.

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