Monday, December 13, 2010

US 10-Year Treasuries Yield Has Been Steadily Rising

Wall Street still stuck in consolidation mode, but we see bullish signals in the making. In the absence of fresh leads, the Dow Jones closed 2pts lower at 11,370points.

However, we see signs of rising risk appetite in the US market. US govvies yields have been steadily rising since early October and the 10-year yield now stands at 3.20%. In addition, gold is retreating off its recent high of US$1,431/ounce, while the VIX index is now down to a low of 17.25.

We interpret the above as signs of rising investor confidence in the US, and thus re-iterate our bullish view on the Dow Jone Industrial Average. We are expecting the Dow to seriously re-test this year’s high of 11,452 points.

We also believe that US equities have a positive outlook in the near-term, giving that leading indicators are pointing to rising risk appetite.

US 10-Year Treasuries Yield Has Been Steadily Rising.
US 10-Year Treasuries Yield 13-12-2010

Gold has been showing signs of recent weakness
Gold Chart 13-12-2010

The VIX index has been steady declining since July 2010
VIX index 13-12-2010

Source: Bloomberg

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