The bigger moves today were actually in the bond market, with the 10-year Treasury yield rising 13 basis points to finish the day at 5.13%. The federal budget deficit for October came in at $404 billion, which is unlikely to help matters as government debt continues to grow.
The 10-year yield is currently bouncing off an uptrend that dates back to late February and also appears to have broken out of a bull flag. Both are bullish technical developments for yields, suggesting that a move toward the 5.60% area is possible.
The US 2-year Treasury yield has also broken out, rising 14 basis points today to 4.89%. It appears to have broken free of either a bull flag or a falling megaphone pattern, suggesting that a move above 5% would not surprise me at all.
The Dollar Index is showing a similar pattern, with a breakout now taking shape. The sharp, nearly straight-line decline from April 2025 appears to be retracing, which could take the DXY back toward resistance at 103.5 and potentially as high as 104.60.
-Mike
Glossary by ChatGPT
Basis Point (bps): A unit equal to one-hundredth of a percentage point, commonly used to measure changes in interest rates and bond yields.
Bull Flag: A bullish technical chart pattern characterized by a sharp advance followed by a period of consolidation, often preceding another upward move.
Capitalization-Weighted Index: An index in which companies with larger market capitalizations have a greater influence on overall performance.
DXY (US Dollar Index): An index measuring the US dollar’s value against a basket of six major foreign currencies.
Equal-Weighted Index: An index that assigns approximately equal weight to each constituent, regardless of market capitalization.
Falling Megaphone Pattern: A broadening technical formation characterized by diverging downward-sloping trendlines and increasingly wide price fluctuations.
Fibonacci Retracement: A technical analysis tool that identifies potential support and resistance levels based on percentage retracements of a prior price movement.
Hyperscalers: Large technology companies operating extensive cloud computing infrastructure and data centers.
RSP (Invesco S&P 500 Equal Weight ETF): An exchange-traded fund providing equal-weighted exposure to companies in the S&P 500 Index.
SPY (SPDR S&P 500 ETF Trust): An exchange-traded fund tracking the capitalization-weighted S&P 500 Index.
SPY-to-RSP Ratio: A relative performance measure comparing the capitalization-weighted S&P 500 with its equal-weighted counterpart.
Treasury Yield: The annualized return implied by the market price of a US government debt security.
Disclosure
This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
