With 10-year yields above 3.1%, here’s the next level technician Louise Yamada is watching

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After a surge in yields last week, rates now sit comfortably at highs not seen in seven years.

The breakout in Treasury yields confirms a trend veteran technician Louise Yamada has seen in the cards for some time.

“We have made a shift from the 36-year falling interest rate cycle into a new emerging rising interest rate cycle which may take us a decade or two to complete,” Yamada, managing director of Louise Yamada Technical Research Advisors, said Tuesday on CNBC’s “Futures Now.” “We’ve made the turn.”

The yield on the 10-year Treasury note surged from around 1.8 percent to above 2 percent in November 2016 following the U.S. presidential election. The spike in yields broke through a 1981 downtrend that Yamada had been tracking.

“The move to 3 percent really completed the reversal from the falling rate cycle to the rising rate cycle. The 1981 downtrend has been penetrated and now you’ve gone through that 3 percent critical level,” she said.

Yields broke through 3 percent earlier in the year as tightening monetary conditions and Treasury oversupply gave rise to a bond sell-off and higher rates. Bond yields rise as prices fall.

Now, Yamada sees a grind higher in interest rates that could take it to levels not seen since April 2011.

“Rates will move slowly, whether or not we get a little bit of a consolidation here,” said Yamada. Bond yields could see “some vacillation here above and around 3 percent, possibly moving a little higher with the December interest rate rise. I don’t see a rush toward 3.5 percent but that’s our next target.”

While the bond market rout and yield spike triggered a sell-off last week, Yamada does not expect any real hit to the economy until much later.

“You don’t have an effect on the economic picture from rates themselves until it gets up near 5 percent and I can’t see that happening in the near future,” she said. “That’s not to say the market can’t have an interim pullback which I think we may still be in the middle of.”

Yields have not risen above 5 percent since July 2007.