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Two of our favorite technical indicators for the 10-year Treasury bond yield are currently bullish. The yield tends to be highly correlated with the ratio of the nearby futures prices of copper to gold (chart). The ratio suggests that the yield, which is currently 3.70%, should be much closer to 2.00%. We view the ratio as a risk-on versus a risk-off indicator.
The Citigroup Economic Surprise Index (CESI) is highly correlated with the 13-week change in the 10-year yield (chart). The CESI fell from a recent peak of 61.3 on March 28 to 5.5 on May 19.
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