Where will 10-year U.S. Treasury Yields go?

Stocks are within shouting distance of all-time highs, reflationary assets like gold (COMEX:GCJ14) are breaking out to fresh highs, and initial jobless claims are back to levels not seen since 2007. One would expect an environment like this to produce rising treasury yields, and yet the chart looks like they could drop materially from here. The ostensible reason for downward pressure on yields is the United State’s stand-off with Russia, but there are other factors at play.

National gasoline (NYMEX:NGJ14) prices are back above $3.50/gallon, and stand to hamper retail sales as weather-weary consumers get ready for spring. The University of Michigan consumer confidence survey from Friday was noticeably weak, and a closer look at the details showed that 5-year ahead inflation expectations at a mere 2.9%. Many analysts expect the U.S. economy to reach escape velocity in 2014, but there is still ways to go despite some positive developments.

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