Technically Speaking

Inflation Reports Put Interest Rates Back on The Rise

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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Both 10-year T-Note yields and the U.S. Dollar Index firmed the week ended Feb. 17 after posting weekly reversals two weeks earlier. Labor Department reports of January consumer prices and producer prices reminded traders prices remain a long way from the Federal Reserve's 2% inflation target (DTN ProphetX chart)


After a three-month reprieve from the upward procession of interest rates, rates on 10-year T-Notes pushed up from 3.74% to 3.83% in the week ended Feb. 17, prodded by January increases in both consumer and producer prices. Annual increases of 6.4% and 6.0%, respectively, offered stark reminders that price gains remain a long way from the Federal Reserve's 2.0% inflation target and several more rate hikes are likely. Technically, after a downward three-month correction, rates posted a weekly reversal in the week ended Feb. 3 and have been climbing since, accompanied by a bullish turn in the weekly stochastic indicator. The upward trend in 10-year yields has resumed, in line with fundamental expectations.


Similar to 10-year T-Note yields, the U.S. Dollar Index experienced a correction in its upward trend, but the 12% correction in prices was deeper and lasted four months, instead of three. The U.S. Dollar Index also posted a weekly reversal two weeks ago and has traded higher since, rising from 103.63 to 103.86 in the week ended Feb. 17. The anticipation of more rate hikes ahead is fueling the bullish turn in the dollar, confirmed by a bullish turn in the weekly stochastic. Technically, prices have not yet overcome resistance at 104.00, but the bullish change in momentum is one bearish source of concern for commodity prices in general.


April crude oil fell $3.37 in the week ended Feb. 17, ending Friday at $76.55. Over the past eight months, spot crude oil prices have fallen from above $120 a barrel to the mid-$70s, but it's only been in the past month and a half that crude oil supplies have picked up, responding to an increase in domestic production. Ironically, even though oil supplies have increased lately, spot prices have simultaneously been building a base of support above $70. Fundamentally, oil prices should have support from White House intentions to replenish the Strategic Petroleum Reserve, if prices slip below $70. On the other hand, the recent build in supplies is bearish. Technically, April crude oil prices have traded in a sideways range between roughly $71 and $83 for three months and haven't tipped the next direction yet. A close above $83, if it happens, would turn the trend up.


Comments above are for educational purposes only and are not meant as specific trade recommendations. The buying and selling of grain or grain futures or options involve substantial risk and are not suitable for everyone.

Dana Mantini can be reached at


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