Heading for 7-8%
Preface: Americans are in a panic because of the rise in interest rates. Frankly, we do not understand the panic. Current interest rates are relatively low when compared against the 100-year track. There was a time when retirees could live comfortably in the interest income of their savings. I remember 19% T-Bill rates and took out a home mortgage in 1983 at 14%. America can survive higher yields despite the national debt. A rise in yields to 8% or higher will do much to clean out the system long term.
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Factor LLC, my trading company, has been trading the 30-Yr T Bond futures contract since the 1970s. I have watched and participated in every major trend.
Here are the highlights through the lens of classical charting principles. Remember, a down trend in the price of treasuries is the reciprocal to higher yields.
In Aug 1982 the T-Bond futures chart (price, not yield) completed a textbook 5-point symmetrical triangle on a daily chart. We caught this trade from the long side. This was the absolute generational TOP in yields (bottom in prices). Factor traded this pattern from the long side. In fact, trades at the beginning of this generational bull trend in price helped convert Factor LLC from a retail spec account into an institutional account.
The triangle became the head of an historic, massive H&S bottom in price, as shown below, and a top in yield. Again, Factor traded this H&S from the long side via futures contracts.
Thus began a multi year decline in price and advance in yields. The chart below patches in the H&S top in yield and shows that the entire 36-year fall in yields took the form of a classic price channel.
Then something historic happened in Apr 2022. Yield broke out of the down channel, ending the multi-decade decline, and began a new generational rise in yield (decline in price). This is shown on both the chart above and the chart below.
A similar topping in yields and bottoming in price occurred in the Eurodollar futures market (interest rates, not FX). This market was retired by the CME and replaced by the Secured Overnight Financing rate market. While the bottom in treasury yields was occurring throughout 2020-21, a top in Eurodollar futures (price) was also forming.
We saw this top in Eurodollar futures in real time. The screenshot below was from an email sent to our institutional partners on Jan 9, 2022. Based on this chart pattern, Factor LLC established a large short position.
Below is a close-up view of this ongoing advance in yields in the 30-Year Ts. The upside breakout of the channel established a target of around 5%, which was met in Oct 2023.
As shown above, yield from Oct 2023 until Jul 2026 formed a classical chart pattern known as an ascending triangle. This pattern has been completed with an initial upside target yield of 6.257%.
But there is more upside than that based on classical charting principles. Often the breakout of a price channel leads to a move equal to two times the height of the channel, or in the case of T-Bonds, a yield of 7.7%. This is where I believe the 30-Yr is headed.
Factor LLC is primarily an institutional trading firm. In our retail arm we offer updates on the chart patterns we are actually trading. We began this service in 2014. We have never raised the price of this service to the charter members.
Disclosure: Factor LLC is short the U.S. 5-Yr T-Note futures contract.
Factor LLC is committed to excellence in interpreting charts in accordance with the foundational rules of Richard W. Schabacker (1933 book) and Robert Edward and John Magee (1948 book). We believe that pure classical charting is as valid in 2026 as it was 90 years ago.
For more information on Factor's retail trader service, see below:
https://www.peterlbrandt.com/#av_section_6
and here:
