Comment of the Day - US 10-year Treasury Yield – Will be less resilient over the next 5 to 15 weeks

As of last Friday (2/26/2021), the Micro Market Resilience Index© for the US 10-year Treasury Yield was very high in its normal cycle.  Projections of the Micro MRI for the 10-year yield suggest that we are probably seeing the strongest resilience of this series at this time.  Thus, the strong move higher last week was not surprising. 

The projections also suggest that yields will have less resilience over the next several weeks.  The Micro MRI indicates a short cycle of resilience lasting 10 to 20 weeks. When the index is in the upleg of its cycle, the series - the 10-year yield in this case - is more resilient and is less likely to decline, all else equal.

The Micro MRI for the 10-year yield is just now completing its upleg.  Based on projections of the MRI from 1962 to 2010, the upleg will be completed March 12 (plus or minus a few weeks). 

When the upleg is completed, the Micro MRI will shift to its downleg.  After that inflection point, yields may decline, not move higher, or move higher much more slowly – based on current economic conditions.  But they are not likely to continue to move higher at the recent pace.