KING WORLD:

“If we see the yield on the US 10-Year Note break below the 1.8% level, what it’s to signal to bond traders around the world is that we have a deflationary wave coming.

I think the reason the 1.8% level has been a floor so far is because most traders are convinced the Bernanke-led Fed will not allow deflation to occur.”

Dan Norcini continues:

“If you look at the following weekly chart of the US Ten-Year Note, notice the yield has never closed, on a weekly basis, below the 1.8% level. It has penetrated that level on more than once occasion, but always recovered to close back above that level by Friday.

If we were to see a weekly close below the 1.8% level, that would definitely confirm the market would be expecting a serious bout of deflation.

[link to kingworldnews.com]