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10-year yield hits highest level since July. How to play rising rates

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As Treasury yields rise, some related investments stand to benefit, two traders say.

The U.S. 10-year Treasury yield on Friday reached its highest level since July following the Federal Reserve’s suggestion earlier in the week that it would begin winding down its asset purchasing program. On Monday, the yield surged above 1.5%.

“We’re definitely seeing a break above key resistance,” Simpler Trading director of options Danielle Shay told CNBC’s “Trading Nation” on Friday.

“I expect the 10-year to move at least 1.5%. If it can break that resistance area, I’m open to even 1.7,” she stated. With that in mind, I am primarily focusing on the banks as well as any trading company.

Her favorite was JPMorgan for its leadership position in its industry, the growth of its trading offerings and its strong technical setup.

Shay explained that “I am looking for a breakout to new heights,” which would be around the $180 price level.

Premarket trades on Monday saw JPMorgan trading at just $164 per share.

Craig Johnson, Piper Sandler’s senior technical analyst said that two other names appeared well placed to take advantage of rate-related upside.

We’re seeking 1.50-1.75 per year on the 10-year. Johnson stated that Johnson has been sticking to this call throughout the year.Bank of America “It is one of the most closely correlated when it comes back to interest rate.”

Johnson also likes SVB Financial, another name he found to be highly correlated with bond yields.

“Both of those charts … look technically constructive. Johnson stated that they are creating what Johnson would call consolidation patterns. Johnson stated that the consolidation patterns seen in these shares usually resolve to the benefit.

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