{"id":18649,"date":"2025-09-13T16:27:54","date_gmt":"2025-09-13T22:27:54","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=18649"},"modified":"2025-09-14T06:35:14","modified_gmt":"2025-09-14T12:35:14","slug":"yield-curve-steepened-last-week-while-the-us-equity-indices-became-very-overbought","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=18649","title":{"rendered":"Yield Curve Steepened Last Week, While the US Equity Indices Became Very Overbought"},"content":{"rendered":"

\"\"<\/a><\/p>\n

While Treasury yields have rallied sharply over the last three weeks (since the end of August) it looks like the Treasury yield curve steepened a little last week as short-term maturity yields rose, while the 10 and 30-year yields fell.<\/p>\n

What does this tell us about the upcoming monetary policy announcement due to be released this Wednesday, September 17th ?<\/p>\n

\"\"<\/a><\/p>\n

The high probability of a 25 basis point move lower to 4.125% seems almost a disappointment now given the benchmark payroll revisions.<\/p>\n

However the futures haven’t priced in anything resembling 50 basis points or even 37.5 basis points for Wednesday.<\/p>\n

Thursday morning, don’t be surprised if some stock selling is seen, given we are right back to where we’ve been the last year, with fed funds at 4.125% priced much higher than the rest of the Treasury yield curve.<\/p>\n

US Market Overbought ?\u00a0<\/strong><\/em><\/p>\n

\"\"<\/a><\/p>\n

Love these one-page updates from Bespoke on all the notable US equity indices.<\/p>\n

Yes, the general US equity markets are largely overbought.<\/p>\n

Somewhat surprising is that the QQQ’s are the least overbought of a plethora of US indices.<\/p>\n

Summary \/ conclusion:\u00a0<\/strong><\/em><\/p>\n

FOMC announcement week is always interesting, and this week will likely be the same.<\/p>\n

You’d have to think the equity markets are due for some downside, but is that accompanied by Treasuries that rally after Wednesday afternoon, or a decline in value ?<\/p>\n

Certainly the benchmark payroll revisions would have to led many to conclude that the short-end of the Treasury yield curve will likely steepen.<\/p>\n

The 10-year Treasury yield traded down to 3.88% on the Liberation Day stock market decline in April ’25. It’s bouncing around near 4% presently and closed at 4.06% on Friday, September 12th.<\/p>\n

On the CBOE TYX yield chart, the 10-year yield looks very oversold, and the chart anyway looks like the 10-year Treasury yield could rise back into the 4.20% – 4.30% area.<\/p>\n

\"\"<\/a><\/p>\n

None of this is advice or a recommendation, but only an opinion. Past performance is no guarantee of future results.<\/p>\n

Thanks for reading.<\/p>\n","protected":false},"excerpt":{"rendered":"

While Treasury yields have rallied sharply over the last three weeks (since the end of August) it looks like the…<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[190,163,150],"tags":[],"class_list":["post-18649","post","type-post","status-publish","format-standard","hentry","category-10-year-treasury-yield","category-fomc-meeting","category-stock-market-sentiment"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/18649","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=18649"}],"version-history":[{"count":7,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/18649\/revisions"}],"predecessor-version":[{"id":18660,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/18649\/revisions\/18660"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=18649"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=18649"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=18649"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}