Interest Rates

August 10, 2009 - On July 13th traders sold short the 10-year T-note. The yield on the T-note at the end that day was 3.38%. Stop out this T-note short-sale if its yield closes any week below 3.46%, or on any Monday-to-Thursday below 3.34%.

T-note yields have climbed since my recommended short sale, and closed Friday at 3.86%. So the present yield is fairly far from my stop-out point. But the yields on government debt instruments have become volatile, given the huge surge in federal spending in recent months. The federal debt is totally out of control, and over time, T-note yields will rise as a result. I expect that yields will accelerate upward once the 4%-4.12% barrier is broken, which represents a key resistance level.

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