Will Interest Rates jump higher?

It could happen, as you will see on today's weekly chart of the 10 year yields .... symbol: $TNX.

The good news is that today's 10 year yield chart shows a five down trend. The bad news is that the one year weekly trend line is breaking out to the upside.

Actually, the bad news might be a little worse because the TNX has had a 4 month sideways pattern. From a technical standpoint, the longer a sideways trading range, the larger the breakout can be. So, we have a sideways trading range breaking above a 4 month resistance line. Unless Bernanke can contain this move within the next few days, he will lose control.

Such an event would be bad for the economy because higher yields means higher interest rates for borrowers. Yes, higher interest rates are good for banks ... that is unless they get too high and choke off consumer borrowing and spending. Bottom line: It is now time to keep an eye on interest rates in the near term.

And while you are at it ... keep an eye on the 30 year yields ... symbol: $TYX. The TYX (which also relates to mortgage rates) is jumping higher and 34.62 and 34.75 are important numbers to watch.

Why? Because if the 30 year yields continue to rise after that level, they can go a lot higher with Bernanke losing control.