Technical indicators show that the Federal Reserve may raise interest rates within the year | Barron Macro

The bond market is sending signals that investors should pay attention to.

Author | Doug Bush

Editor | Liu Yangxue

The bond market is releasing some signals that investors may not want to ignore.

The movements of the 2-year and 10-year U.S. Treasury yields, along with the price trends of the iShares 20+ Year Treasury Bond ETF (TLT), indicate that market expectations regarding economic growth, inflation, and monetary policy are changing. Taken together, these indicators may have broader implications for risk assets.

It is uncommon for bonds and stocks to decline simultaneously. Typically, when the stock market weakens, market participants seek refuge or adopt a more defensive posture. But this time, it is not the case.

The trend of the 2-year U.S. Treasury yield shows that short-term bonds have recently faced fierce selling (note: yields move inversely to prices):

Breaking below the 50-week simple moving average suggests that interest rates are likely to rise this year.

In late February, this yield started with a bullish piercing pattern and engulfing pattern, breaking above the 50-week simple moving average. Note that this moving average provided strong resistance in 2024 and 2025. In the first half of 2024, the yield peaked near the integer level of 5%, forming a bearish evening star pattern that included a doji. The doji in September 2024 and the engulfing candlestick in April 2025 formed a phase bottom for yields. This sends a strong signal that the Federal Reserve may actually raise interest rates later this year. On Friday, the 2-year U.S. Treasury yield traded around 3.95%.

The 10-year U.S. Treasury yield is a key indicator for setting mortgage rates and corporate borrowing costs. Two weeks ago, I discussed this tool when it was breaking above a bearish descending triangle. Today, I will look at it from a longer-term trend perspective by examining a five-year monthly chart:

The trend of the 10-year U.S. Treasury yield suggests it is breaking upward.

As can be seen, since breaking upward from a bull flag pattern in 2023, it has generally been consolidating sideways. Note that it previously experienced a significant rally: from just above 1% in mid-2022, it surged to nearly 4.5% by the end of 2022. This indicates it is likely to break upward, possibly nearing 5% later in 2026, where a bearish engulfing pattern formed at the end of 2023. Also, note that the 50-month simple moving average has now caught up with the price. From the relative strength index (RSI) perspective, it is far from overbought, unlike in 2022 and 2023 when it exceeded 70. This means there is still room for yields to rise, and we are likely to hear more discussions about recession concerns. On Friday, the 10-year U.S. Treasury yield traded around 4.45%.

Finally, we observe the 20-year yield through the iShares 20+ Year Treasury Bond ETF (TLT):

The low points that have been elevated for 10 consecutive months were broken this month (note: yields move inversely to prices).

This ETF’s current trading price has fallen below both the 50-day and 200-day simple moving averages and has formed a bearish “abandoned baby” pattern at the beginning of this month (this is the same type of pattern as the bearish “island reversal” that occurred on March 11, but was completed in just three days: first gapping up, then gapping down). Please note that the higher low pattern formed in May, July, and September of last year—marked by a bullish “piercing line,” a “spinning top,” and a “doji”—has been broken this March.

I believe the TLT is likely to test the $84–85 range in the short term, potentially forming a double bottom pattern thereafter. Last Friday, the ETF was priced at about $85.50.

For now, the message from the bond market is clear—investors may want to pay attention.

This article is an original piece by Barron’s. Reproduction without permission is prohibited. The English version can be found in the report dated March 27, 2026, titled “The Bond Market Is Sending a Message. Investors Should Pay Attention.” (This content is for reference only and does not constitute any form of investment or financial advice; markets carry risks, and investments should be made cautiously.)

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