Ten year interest rates at critical inflection point

My longer term model indicates that the fed will push down US interest rates one more time to an all time low before the Yellen fed finally loses control of the bond market.  If this plays out then it should be a warning to everyone that the recovery which everyone is talking about is a papered over fraud and that government is manipulating all of the numbers in order to try to save face.  We are now at a herd lie detector moment with respect to interest rates.  In other words, the herd will either signal that it believes the recovery is real (and thus begin to demand credit resulting in higher interest rates) or it calls BS on the paper recovery and heads to another low - a lower low.

If the economy really is doing better then interest rates need to break out of the long standing downtrend here, likely somewhere in the top blue circle.  If they can't do that then they will most likely break down per the long red line and go touch or slightly exceed the bottom support line in a throw under.  Per the chart at the link above, that would be 5 rail bumps and it would signal that the end of the trend has arrived.  A throw under followed by a break back up into the channel would seal the deal.

My money is on lower interest rates leading to a lower low.  I suspect that it will not result in higher home prices or higher home sales.  I think that we are near the place where the law of diminishing returns kicks in.  More federal debt will begin to result in negative economic growth.  At that point the federal reserve will certainly stop adding to its balance sheet lest it end up BK in the deal.  Once the fed stops buying treasuries and crappy home mortgages, interest rates will skyrocket and the stock market gambling pit will crater as people chase the "safe returns" from higher interest rates.

If TNX cannot break out here it will result in a declining double top of the well formed and ugly kind. 




Zooming it, it is very possible that an ending diagonal is in process.  This is not confirmed yet by any means but it would not surprise me as I have seen this happen many times in the creation of the right hand "Owl Ear" of a declining double top of late.  I would expect to see the throw over of the 5th rail bump of that tiny triangle occur in the next 1-2 days followed by a reversal downward before the end of the week.  I think the fed gets to flex its muscles over the global economy one last time before beginning to lose control of the bond market in late 2014 and confirming that it has lost control by mid 2015.  After that, good luck to us all.