A Major Move is Ahead For Interest Rates

U.S. Treasury market volatility is at three-decade lows, strongly indicating that a major move is ahead that will have significant effects on the financial markets, including precious metals.

Although often overlooked by retail investors, there is a strong case that the most important market to watch is not stocks but U.S. Treasuries. Treasuries set the tone for long-term interest rates, shaping everything from government and corporate borrowing costs to mortgage rates, stock prices, and even precious metals prices, which perform best in environments of low real yields. Right now, I see clear and compelling evidence that U.S. Treasuries are on the verge of a major move that will have sweeping consequences across the entire financial landscape.

My thesis is based on the fact that volatility in the U.S. Treasury market is currently at multi-decade lows, a condition known as a “volatility squeeze.” History shows that such squeezes in financial assets almost always precede major moves. For additional background, I recommend reviewing my detailed explanation from last week, which outlines the concept of volatility squeezes and forms the foundation of this Treasuries thesis.

Now, let’s examine the charts across the Treasuries complex, beginning with U.S. 2-Year Treasury Note yields, to highlight the highly unusual setup currently developing. The weekly chart shows a triangle pattern forming over the past two years, signaling a period of compression similar to a spring under pressure. When that pressure is released, it typically leads to a powerful breakout, and I expect a similar move in Treasury notes soon.

This volatility squeeze is further confirmed by the Bollinger Band Width indicator beneath the chart, which is a valuable tool for tracking volatility in financial markets and assets. I’ll address which direction Treasuries are likely to break out shortly, but first I want to show the fascinating volatility squeeze setup across the entire Treasuries complex.

The same triangle pattern and volatility squeeze setup can also be seen in U.S. 5-Year Treasury Note yields:

The most important and closely watched bellwether of the Treasuries complex, the 10-Year Note yield, is also showing a triangle pattern and volatility squeeze setup:

Finally, the 30-Year U.S. Treasury Bond yield is showing the same setup as the shorter maturities, and the fact that this pattern is consistent across the entire Treasuries complex strengthens my thesis by highlighting how broad-based it is: