A rather worrisome development in the bond market is threatening equities’ meltup.

continued for members…We’ve discussed this many, many times in the past. A breakdown in the 2s10s leads to corrections, while a breakout leads to crashes.While we pay close attention to breaking through sloping TLs here, most folks look at horizontal resistance. This means that the real risk comes if/when 2s10s rises above -13 bps.

Although the breakout failed yesterday, SPX is slated to open above its 1.618 based on futures action. VIX is still in position to help equities out with a dip below 11.81 if need be.
And, the EURUSD always break out, though that would take a bit more effort. Note that DXY is getting a slight bump and is currently backtesting its SMA200. Perhaps the most important charts to watch are CL and RB, which are both approaching 200SMA support.

A breakdown would send the 10Y lower.Unless the 2Y keeps pace — and it isn’t even close to a breakdown — the inversion lessens and the 2s10s could top -13 bps. If that happens, SPX could have a heck of a time remaining above 5638.Stay frosty…