10-year Treasury yield hits 4% on renewed inflation fears

 

(1 March 2023) Despite the Fed’s concerted efforts to tighten monetary policy over the past year, inflation remains a major problem for the economy.  Today’s ISM manufacturing price report came in stronger than expected, renewing fears that we may be facing a fresh wave of price increases.  Not surprisingly, stocks fell and bond yields moved higher as investors recalibrated their expectations regarding further interest rate hikes.  With the benchmark 10-year Treasury now trading above the psychologically important 4% level, it now seems certain that the Fed will be forced to raise rates much higher than previously expected.

The return of inflation is not unexpected.  In a December post, I speculated that bond yields would likely move higher in spring given the afflictions in the horoscope of US Treasuries.  While it isn’t quite spring yet, it’s still very close, especially since the specified aspect is well within range.  In addition to the harmful ongoing Saturn dasha influence that will last into September 2023, the key measurement in this respect is the opposition aspect from Saturn (5 Aquarius) to the natal Sun (5 Leo).  This aspect is fast approaching its exact opposition, even if its effects can linger for days or sometimes even weeks after the precise 180-degree aspect.

 

We can also see that the Treasury chart is also under pressure from the transit of Mars (25 Taurus).  It is approaching its natal position (0 Gemini) in the 10th house at the top of the chart and in so doing will cast its square aspect to Mercury (27 Leo) and the Ascendant.  While Mars transits to the 10th house are often not that bad and can even be quite constructive, its square aspect to Mercury here looks more malefic and suggests that treasuries will fall further in value which would push yields even higher.  Of course, if yields go higher, stocks become more vulnerable to declines as they often have an inverse relationship.  This relationship is perhaps even more robust these days given the speed with which interest rates have risen in just one year.

While worries over rising yields and inflation could abate once Saturn moves out of range of its opposition to the Sun in the next few weeks, we should note that Saturn is due to station at 13 Aquarius in a close square aspect to the Moon (12 Scorpio) in June.  This suggests that yields will likely spike higher sometime during the May to July period when this Saturn-Moon square is making its closest aspect.  Whether this produces even higher highs in yields is hard to say, but it does look like it will be a significant move higher.

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Photo Credit: Son of Groucho