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.Follow @AndrewSachaisThis article is commentary by an independent contributor, separate from TheStreet's regular news coverage.