01/21/26
Stocks tumbled on Monday with the headline being the situation with Greenland and the tariffs that President Trump is threatening to European countries, but there is something big going on that is getting less attention. The Japanese Bond market has been in free-fall as their 10-year Treasury Yield hit multi-decade highs. US Yields spiked as well, but are more contained.
I know this isn't the most exciting subject in the world, but bonds and the dollar generally tell a better story than the stocks market, or maybe better put is that the stock market takes its cues from the bond market, and the dollar has its impact, but mostly on the I-fund for us TSP'ers.
The 10-year Treasury Yield broke out of its bull flag in the last two trading days, and being a bull flag, we knew this was very possible, and it was bad news for the F-fund.
If we zoom out a year on a monthly chart we can see that the 10-year has been fairly contained in a range. The red arrows represent the yield at the end of each of the last four quarters and they have all been between about 4.15% and 4.25%. There were some swings in between those closing quarterly quotes, but it has been very stable. It is now poking its head above the descending resistance line of that pennant formation, which means it may be looking to breakout to the upside, and perhaps test that 4.5% area, which it had tested several times last year.
The question there is whether small caps can continue to lead, as they have in recent weeks, if yields start moving higher?
But here's a problem, and while I don't want to pretend I know enough to fully explain the situation in Japan, we know bonds affect the stock market and rapidly rising yields can slow down an economy.
That's the yield on top, and the bond price below. The Japanese Nikkei stock market was down yesterday, but it was making new highs recently, like our stock market. However, this may start weighing on it, and don't forget that Japan makes up close to 20% of the I-fund.
The dollar fell sharply yesterday. For us TSP'ers, the I-fund is greatly impacted by the movement of the dollar.
The I-funds was down with everything else, but the loss was more modest, thanks to the decline in the dollar.
I know sometimes I get my hooks in things and drag it out and in the end it may not have been much help at all, but I have to be open to that Wyckoff Distribution pattern as long as it is playing out. I've mentioned it a week ago and so far it has been tracking fairly close on the S&P 500 (C-fund) chart, so I will likely keep mentioning it until it is no longer a factor.
Admin note: We are having an annual subscription sale this week for new or current subscribers! As always, if you have an annual subscription that does not expire this month, or if you want to convert a monthly subscription to annual, the sale will allow you to tack on an additional year or two to your current subscriptions at the sale price.
As you can imagine, the cost of doing business has risen quite a bit over the past 20 years. Over that time the price of TSP Talk Plus and RevShark's Premium Services have remained the same, and we are planning a modest price increase later this year. This sale provides you and your friends the opportunity to lock in prices that we may not be able to offer again. Spread the word to anyone who you think would benefit from a TSP Talk Premium Subscription.
The DWCPF (S-fund) gapped down and it fell through the support of the neckline of the inverted head and shoulders pattern. It was due for a dip, but the question was whether that would hold on a pullback. Now we have an open gap above and below the current level, and which gets filled first is in question. It may depend on the Greenland news, the tariffs, the Supreme Court, and / or Japan. It' is most likely an opportunity setting up, but from what level?
The ACWX (I-fund index) broke down from its narrow trading channel as well. There are still a few open gaps all the way down to that red line, which was the breakout area. That is a potential pullback target, although if the dollar stays weak, higher support may hold.
BND (bonds / F-fund) broke down as the breakout in the 10-year Yield was just too much for it to hold that 50-day average. Unless this gets back above that 50-day average, the bears are in control of bonds.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.php
To get weekly or daily notifications when we post new commentary, sign up HERE.
Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
Stocks tumbled on Monday with the headline being the situation with Greenland and the tariffs that President Trump is threatening to European countries, but there is something big going on that is getting less attention. The Japanese Bond market has been in free-fall as their 10-year Treasury Yield hit multi-decade highs. US Yields spiked as well, but are more contained.
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I know this isn't the most exciting subject in the world, but bonds and the dollar generally tell a better story than the stocks market, or maybe better put is that the stock market takes its cues from the bond market, and the dollar has its impact, but mostly on the I-fund for us TSP'ers.
The 10-year Treasury Yield broke out of its bull flag in the last two trading days, and being a bull flag, we knew this was very possible, and it was bad news for the F-fund.
If we zoom out a year on a monthly chart we can see that the 10-year has been fairly contained in a range. The red arrows represent the yield at the end of each of the last four quarters and they have all been between about 4.15% and 4.25%. There were some swings in between those closing quarterly quotes, but it has been very stable. It is now poking its head above the descending resistance line of that pennant formation, which means it may be looking to breakout to the upside, and perhaps test that 4.5% area, which it had tested several times last year.
The question there is whether small caps can continue to lead, as they have in recent weeks, if yields start moving higher?
But here's a problem, and while I don't want to pretend I know enough to fully explain the situation in Japan, we know bonds affect the stock market and rapidly rising yields can slow down an economy.
That's the yield on top, and the bond price below. The Japanese Nikkei stock market was down yesterday, but it was making new highs recently, like our stock market. However, this may start weighing on it, and don't forget that Japan makes up close to 20% of the I-fund.
The dollar fell sharply yesterday. For us TSP'ers, the I-fund is greatly impacted by the movement of the dollar.
The I-funds was down with everything else, but the loss was more modest, thanks to the decline in the dollar.
I know sometimes I get my hooks in things and drag it out and in the end it may not have been much help at all, but I have to be open to that Wyckoff Distribution pattern as long as it is playing out. I've mentioned it a week ago and so far it has been tracking fairly close on the S&P 500 (C-fund) chart, so I will likely keep mentioning it until it is no longer a factor.
Admin note: We are having an annual subscription sale this week for new or current subscribers! As always, if you have an annual subscription that does not expire this month, or if you want to convert a monthly subscription to annual, the sale will allow you to tack on an additional year or two to your current subscriptions at the sale price.
As you can imagine, the cost of doing business has risen quite a bit over the past 20 years. Over that time the price of TSP Talk Plus and RevShark's Premium Services have remained the same, and we are planning a modest price increase later this year. This sale provides you and your friends the opportunity to lock in prices that we may not be able to offer again. Spread the word to anyone who you think would benefit from a TSP Talk Premium Subscription.
The DWCPF (S-fund) gapped down and it fell through the support of the neckline of the inverted head and shoulders pattern. It was due for a dip, but the question was whether that would hold on a pullback. Now we have an open gap above and below the current level, and which gets filled first is in question. It may depend on the Greenland news, the tariffs, the Supreme Court, and / or Japan. It' is most likely an opportunity setting up, but from what level?
The ACWX (I-fund index) broke down from its narrow trading channel as well. There are still a few open gaps all the way down to that red line, which was the breakout area. That is a potential pullback target, although if the dollar stays weak, higher support may hold.
BND (bonds / F-fund) broke down as the breakout in the 10-year Yield was just too much for it to hold that 50-day average. Unless this gets back above that 50-day average, the bears are in control of bonds.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.php
To get weekly or daily notifications when we post new commentary, sign up HERE.
Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
