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10-Year Yields Lead May's Markets

By Taki TsaklanosMarket OverviewMay 12, 2017 12:37AM ET
www.investing.com/analysis/the-leading-market-trend-in-may-2017-200188669
10-Year Yields Lead May's Markets
By Taki Tsaklanos   |  May 12, 2017 12:37AM ET
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Investors should understand the leading trends in the market, both long term and short term trends. That is one of the most important recipes for success. InvestingHaven covers long term trends most of the time, but once per month it also pays to look at short term trends.

The important insight here is the word “leading”. The way markets work is simple, yet not visible to at least 80% of investors: one market has the strongest trend, and it influences most other markets. For instance, the dollar’s secular rally was so strong two years ago, that it forced crude oil to collapse and stock markets to get strong push back. The dollar was the dominant (leading) force.

In this article we address the question: Which is the leading market trend in May 2017 and how does it affect most markets?

The most important long term trend is found in 10-year yields, and, unsurprisingly, it also is leading the short term trend in May 2017. Because of that, stocks remain bullish and gold weak.

The first chart represents 10-year yields. Last month, yields were about to break down, that was invalidated, and they recovered soon. Right now, yields are rising again, and that is an important trend for May 2017.

Because of that, stocks are rising. Rising yields suggest higher risk taking which is good for stocks.

TNX Chart
TNX Chart

Consequently, gold is losing ground. Rising rates are not good for gold.

Gold Daily Chart
Gold Daily Chart

Commodities (via BCOM) are not necessarily impacted by rates. Commodities are on the verge of a breakdown. However, we do not see many triggers that would cause commodities to break down, so we remain neutral until proven otherwise.

BCOM Daily Chart
BCOM Daily Chart

Original post

10-Year Yields Lead May's Markets
 
10-Year Yields Lead May's Markets

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