Bond Yields Rising

Below is a chart that illustrates the decline in Treasury bond yields since April. We are now seeing the beginnings of a possible change in trend with yields braking through the top channel line. Bond prices run inversely to bond yields; therefore, higher yield means lower bond prices.

Investments in the low yielding US Treasury market represent a risk aversion trade. When the stock market is in rally mode investors will often times sell treasuries and buy stocks. I believe this is happening now.

Bonds have been the investor preference since April. We should know shortly if investor preference is shifting in favor of stocks longer term.

(Click on chart to enlarge it for easier viewing)