Economic Warnings From The Yield Curve

The yield curve continued to flatten last week as the 30-Year versus 2-Year yield is 84.3 basis points.

The 30-Year yield has been below its 200-week simple moving average or ‘reversion to the mean’ since the week of March 24 when this average was 3.05%.

The weekly chart ended last week with a downgrade that favors higher bond yields. The yield on the 30-Year bond is above its five-week modified moving average of 2.788% and below its 200-week simple moving average of 2.875%. The 12x3x3 weekly slow stochastic rose to 33.61 last week, up from 30.71 on Dec. 29.

Trading Strategy: My value level for 2018 is well above the market at 4.065% which indicates that yields are vulnerable to rise significantly. My monthly and quarterly risky levels are 2.683% and 2.428%, respectively.

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