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Global Macro: Bernanke Won't Derail Rally

The last chart examines the Treasury yield curve. The pair below is of Barclays 1-3 Year Treasury Bond Fund (SHY) over Barclays 20 Year Treasury Bond Fund (TLT).

As long-term Treasuries are sold, their yields rise in an inverse manner. When short-term bonds outperform long-term bonds, it steepens the yield curve, which is a bullish sign, widening the gap between short-term and long-term yields.

The chart below shows that the yield curve has traded in a sideways pattern for the better part of two years. With the recent upturn in equities, the yield curve has steepened in stride with equity markets.

The pair is fast approaching a point of resistance, which is concerning to the trend of risk assets, but a push through resistance could propel equities higher and trigger a move upward in the 10-year yield, above the 2% threshold.

At the time of publication the author had no position in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Andrew Sachais' focus is on analyzing markets with global macro-based strategies. Sachais is a chief investment strategist and portfolio manager at the start-up fund, Satch Kapital Investments. The fund uses ETF's traded on the U.S. stock market to gain exposure to both domestic and foreign assets. His strategy takes into consideration global equity, commodity, currency and debt markets. Sachais is a senior at Georgetown University earning a degree in Economics.
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