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Saturday, June 1, 2013

Rates are up, treasuries are down, and yield chasers are nervous

U.S. Treasuries have bearish formations that appear to be gathering steam. 5-year, 10-year and 30-year Treasuries have inverted 50dma's below their 200 day moving averages and each has breached significant multi-month support levels.

10 Yr Treasury (ZN)

30 Yr Treasury (ZB)

 Following suit to the weakness in  ZF, ZN and ZB, TLT is also breaking support. At the same time, yield chasers in the utility space are selling XLU hard, pushing it officially into bear market territory with a correction, peak-to-trough in excess of 20% as of Friday.

TLT (Treasury ETF)

XLU (Utilities ETF)

Whether the "Great Rotation" into equities has begun I'll leave to the pundits and prognosticators, but rates look poised for a meaningful uptick.

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