Interest rates are nearing a key breakout. This goes in the face of the uber dovish Federal Reserve chatter from the Fed Minutes this past week. The bottom line is, interest rates can go up even if the Federal Reserve does not want them to. This is what is called an open market system. While the Federal Reserve can manipulate them through quantitative easing, lowering the Fed Funds Rate and other metics, ultimately, if time is up, time is up.

Interest rates are close to a breakout. This is likely to happen by early next week and it will be a huge F-U to the Federal Reserve. The big question is, how high will they go. Notice in the chart below of the $TBT which mirrors interest rates (yields). There is a down-sloping trend line connecting recent highs. There is also the daily 50 moving average. Both these points meet at the current price. When price breaks above them, it will be like a jail break and a mega surge is likely. It is possible to see the 10 year yield which currently trades at 1.58%, jump to 2.00%. While that does not sound like a lot, it is the equivelant of two rate hikes by the Federal Reserve.

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