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The 3 Charts That Matter Most Right Now

Look beyond the S&P 500 Index for the best clues

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The 10-Year Treasury Yield

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Global equities aren’t the only asset class at key support. The selloff in higher-risk assets has fueled a flight to quality into Treasuries, driving yields down to levels last seen in autumn 2013.

The 10-year, for its part, put in a double-top near the 3% level and is now hanging precariously above both its 200-day moving average and a key support line. Note that the 10-year yield traded above its 200-day MA for most of 2013 — a period that also brought a 32% gain in U.S. equities.

As a result, a break below the 200-day MA here would signal an important shift toward an environment of slower-growth expectations, greater investor risk aversion and — possibly — renewed inflows into bond funds. What’s more, falling Treasury yields signal demand for dollar-based assets. This is potentially (but not definitively) a sign of continued outflows from emerging-market currencies.

The 10-year is often one of the best barometers for market conditions, and that’s even more true today given its close proximity to important support levels.

Article printed from InvestorPlace Media, http://investorplace.com/2014/02/3-charts-sp-500-treasury/.

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