The "Big Picture" on yields

Over on Barry Ritholtz' excellent blog, there's been a discussion about the longer-term outlook for interest rates. I couldn't help but weigh in. The short version: I suspect the great bull market for bonds ended in mid-2003, and that we're in a multi-year bear phase. I don't think we're going to see 10% 10-year anytime real soon. But 6% ... or even 7% in the next few years? Sure.

Technically speaking, this 10-year chart shows how we've tested the uptrend off the 2003 low twice ... and held. I also suspect we made an inverted head and shoulders bottom, with the left shoulder around the time of the Long-Term Capital Management crisis ... the head during the 2003 deflation panic ... and the right shoulder several weeks ago. If this uptrend line gives way, and/or we take out 4.4% or so on the 10-year, then my thesis is bunk.