10-YEAR CROSSES 4.5% AND MARKETS ARE FALLING | COME FIND OUT WHAT THE BOND MARKET IS TELLING US

Añadido: 2026-05-19

[00:00:02][music] >> Yo, what is going on everybody? Welcome back to another Kev Capital video where we spend some time pulling back the curtain on some of the most important charts in the market and what it means for you. Before we jump into the video today, if you enjoy the content, please like, subscribe, and leave a comment below. Also, do not forget to check the links in the description below where you can visit patreon.com {slash} Kev Capital and analyze, trade, and invest the markets with me on a daily basis. We are now running a multi-tier subscription system, which gives premium access to absolutely everyone for an affordable rate. And with that being said, let's jump right into it. Today, we're going to do a real kind of a chart of the day video like I used to do. It may be smaller, it may be longer, we'll see, but this is very important, folks. We're going to talk about the bond market. We're going to talk about the 10-year yield. We're going to talk about the 2-year yield because something very big is happening in the markets. And again, this is something that I've been tracking very closely, right? We have inflation spiking in the background. We have oil prices continuing to stay elevated. We still have a lot of uncertainty going on in terms of the Iran conflict, even though I try not to talk about it anymore. Rumors are swirling that there could be escalation when the president gets back from China and that Israel's chopping at the bit to get back at it and maybe bombings again.

[00:01:27]And I don't know if that's the exact reason why we're seeing this spike in the 10-year yield, but that's the whole point of it, right? The market gets very uncertain and very weary when the 10-year yield spikes above 4.5% and that's what we're currently seeing.

[00:01:45]Now, not only is it spiking above 4.5% for the first time since, ironically, April of 2025 when we had a major move down in the markets because of tariffs, but it's moving up very aggressively and it's pressing up against this consolidation pattern that it's been in now all the way since 2023. Really a bullish consolidation pattern. And this is really worrisome because I'm telling you guys right now if people are dumping US bonds demanding higher yield and that's causing the 10-year to spike higher, there's a reason behind it. The bond market is much bigger than the equity markets. The bond market is the all be all signal to what the markets will end up doing and what they feel is coming economically or geopolitically. So, that's why you're seeing the move down in the markets today across the board. Equity markets are down, crypto is down, risk assets are down, dollar is up. Right? You're seeing a lot of uncertainty come in now and it could be again, I'm speculating, could be potential escalations in the geopolitical sphere.

[00:02:52]It could be the macro headwinds potentially starting to escalate on the back end of that. Potential energy crisis is going on in Asia, which you don't hear about a lot in the US, but there is energy crisis happening over in Asia. So, I don't know for sure, right?

[00:03:07]And I don't want to sit on here and start dooming about it because I I really don't know and I'm, you know, I I can't get inside of the head of the bond market. But we know that there are these fundamental backdrops there. So, that's all I could work off of and tell you is that we know what we have in front of us. We know inflation is spiking higher and we know the market is sensitive to inflation, not like it was in 2021 where they let it run to 9% right? There We're already at 6% PPI and 4% headline CPI.

[00:03:36]So, the market is more sensitive to that due to the fact that we've already had an inflation crisis a few years ago. You know, in 2021 there wasn't inflation for a very long time, so the market was desensitized to the idea that inflation would become a problem. Now, the market and the bond market is much more sensitive to that. So, maybe the bond market's getting ahead of that or maybe a potential hawkish Fed coming in a new hawkish Fed chair because of the fact that we're going through this energy crisis, right? You're seeing inflation spike up. There may be an escalation again in the geopolitical sphere. That's all we have in front of us, so that's all I can deliver to you. Is there something else in the backdrop? I don't know yet. If this keeps going higher and this keeps breaking out higher, it's going to cause extreme turmoil in the markets.

[00:04:22]And based off a technical chart, it looks bullish right now. This is a bullish pattern. This could be a potential bullish breakout coming. And when you look at the indicators, and it's not everything, it's a very macro driven, um you know, ticker, right? The 10-year is very macro driven. But from a just a technical perspective, you have a weekly time frame breakout signal here with a buy signal with money flow increasing. You have LMACD momentum crossing the zero line and heading higher. You have RSI bouncing off the 50 level and heading higher. You have stock RSI breaking above the 80 level. There's a lot of bullish momentum in the technicals. And then from a chart perspective, structurally, this is a bullish pattern. So, if this breaks out above 4.5, 4.6, gets to 4.7, there's no doubt in my mind that some type of bigger fundamental macro backdrop is going to present itself, whether it's something we already know about or whether it's something new.

[00:05:16]Okay? So, that's what we're going to need to watch closely here, but I wanted to make this video so that you guys understand how the bond market works, how the equity markets are correlated, how risk assets react when you see that 4.5% line in the sand get crossed. And And you know, it's a little different than the times before where, you know, we would come up to this level and get weak and reject. Now, you're showing strength. So, that's where I'm getting concerned is like, "Okay, wait a second here."

[00:05:41]You know, we talk about how the market can keep heading higher as long as fundamentals are strong, as long earnings are strong, as long as there no labor market issues. As long as the Fed sitting in the background. As long as inflation is tame. But when you start to get escalations in the background, right? And you start to see that reflected in the bond market and yields rising.

[00:06:01]That's your signal to say, wait a second, something is brewing here and the media may be not reporting it yet.

[00:06:06]They don't know about it yet and something could potentially appear. Now again, let me just be reassure you, we don't know for sorry certain yet. So we have to sit back and watch this play out. Um but we know that what we have in front of us is a technical chart that looks bullish. We have indicators that look bullish and we have a a clear break through 4.5% With that said, if you even look at the two-year, right? And the two-year yield is very representative of what the Fed is going to do with rates. Remember that. The two-year yield is the biggest most correlated asset to what the Fed will likely do with rates and that's breaking up above 4% after deviating out of this pattern to the downside. And then right while it hit the apex, it then broke out to the upside and now it's breaking out higher. Well, let me tell you something. The Fed funds rate is lower than 4% right now. I believe it's at either 3.5 or 3.7, somewhere in that range.

[00:06:58]This is starting to price in the idea of rate hikes.

[00:07:01]Okay, not rate cuts. The two-year is telling the Fed that rates should potentially be a quarter of a basis point higher than where they are now or maybe you know, 50 basis points higher.

[00:07:12]I'm not sure where the Fed funds rate is right now. It's in between 350 and 375.

[00:07:16]So again, that's a problem, right?

[00:07:18]That's a problem for markets. Markets don't like that. Markets don't want higher rates. We're supposed to get lower rates, remember? So again, things are moving in the opposite direction and you're just starting to see the bond market react to that. How the over how this pans out over the next week or two, we're just going to have to watch it closely and we'll have to obviously watch the equity markets closely along with that. And then obviously the news, right? We have to get we have to turn the news back on and see what's going on here. Is this just a blip in the radar and it ends up pulling back or is this something bigger? So, that's what we're going to have to watch out for. I wanted to make this video so that you guys understand how the bond market works, how it's correlated to the markets, and why you're seeing a pretty sharp move down today on the Nasdaq, the S&P, multiple sectors of the market, and crypto. And I'll tell you what, it's actually kind of nice to see Look at software, right? ServiceNow, Microsoft, Zeta, Adobe, all moving up. So, I'm pretty happy about that, right? Because you guys know that the way that I'm kind of building my portfolio right now is slowly allocating into some of these software stocks and also very, very slowly allocating into crypto as the year goes on, right? As the year goes on. That's what my plan is because, you know, revenues are accelerating, earnings are good on these stocks, and I want to own them, and obviously crypto is in that mid-term year cycle you know, bear market, and I want to obviously accumulate that, too. So, that's off topic, obviously, but nice to see those getting a move up today.

[00:08:41]Little rotation occurring. But again, forget all that for a second. If this keeps rising, nothing will be safe. So, that's what I want you guys to watch out for. That's what I'll be watching out for, too.

[00:08:51]I don't think I I think I touched on everything I wanted to talk about with you guys today.

[00:08:55]Just keep an eye on the 10-year, keep an eye on the 2-year, also, and just keep an eye on any potential macro headwinds that could be servicing cuz the bond market usually precedes those things or starts to price in the idea that something's not right. And we have not been above 4.5% in a while. We We really haven't been above 4.5% with force since 2024. So, all right, guys, that's pretty much it. If you guys have any questions or anything, or if you enjoyed the video, or if you even learned something, please comment below and let me know.

[00:09:23]It also helps the video get out there to the algorithm so others can learn, others can see this type of content.

[00:09:29]They need to learn these things. So, if you guys enjoyed the content, please like, subscribe, and comment below. And also, if If to track the markets with me in a much more granular fashion, you know the deal. Check the links in the description below where you can visit patreon.com {slash} Kev Capital.

[00:09:42]Multi-tier subscription system now gives access to everybody. So, with that being said, I hope you all have a nice weekend. Peace out.

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