Takeaway

With long-end US Treasury yields rising again, the presenter argues against attempting to pick absolute tops and instead advocates waiting for confirmed monthly candlestick reversal patterns confirmed alongside macro drivers like crude prices. A historical study of US 10-year yields since 2000 shows that 56% of major turning points produced a clear monthly reversal signal within two months, delivering a median subsequent swing of just over 88 basis points.

What the presenter said

• Long-end US yields are rising again amid market debate over where yields will top out and speculation around algorithmic bond vigilantes [00:06, 00:11, 03:07].
• Rather than front-running turns, market participants should wait for price action to produce a legitimate swing signal [00:24, 03:11].
• Analysis of US 10-year yield monthly data since 2000 identified 36 major swings, of which 20 (56%) generated a clear reversal signal within two months (11 in the turning month, 6 after one month, 2 after two months, and 1 currently active) [00:39, 01:17, 01:23, 01:33, 01:40].
• Across 19 completed cases, the median move from the signal close to the next opposite swing was just over 88 basis points (average around 98 basis points) [01:58, 02:09].
• Bearish reversal signals around yield highs delivered a median decline of around 112 basis points, whereas bullish reversal signals around yield lows saw a median rise of roughly 78 basis points [02:25, 02:34].
• Technical candlestick patterns should not be used in isolation but combined with fundamental drivers, noting a persistent relationship between crude oil prices and the long end of the US curve [02:50, 02:58].

Trade ideas

None stated. The presenter does not propose an active trade recommendation, advising instead to track the relationship between crude prices and long-end yields while waiting for a confirmed monthly reversal candle to materialize before fading the move.

Levels and data cited

• Data Source: StoneX calculations evaluating monthly US 10-year yield data across 36 major swings since 2000.
• Historical Post-Signal Magnitude (US 10-Year Yield):
  • Median move: "just over 88 basis points"
  • Average move: "around 98 basis points"
  • Moves $\ge$ 50 bps: 16 of 19 signals
  • Moves $\ge$ 75 bps: 14 of 19 signals
  • Moves $\ge$ 100 bps: 8 of 19 signals
  • Median drop following bearish reversal at yield highs: "around 112 basis points"
  • Median rise following bullish reversal at yield lows: "roughly 78 basis points"

Risks and what would invalidate this

• Not every market turn produces a reversal signal; 44% of historical swings since 2000 provided no clear pattern within two months.
• Candlesticks alone cannot pinpoint exact tops or bottoms in advance and must be corroborated by fundamental drivers.