A 40-year bull run in the bond market is under pressure as Treasury yields touch the 'most important trend line of all time'

• The 40-year bull market in bonds could be on its last legs as interest rates continue to rise.
• The implications are wide-ranging as higher interest rates often translate into lower stock prices.
• A chart of the 10-year US Treasury yield includes "the most important trend line of all time," Carter Worth said.

The 40-year trend of declining interest rates could be on its last legs as the 10-year US Treasury yield tests resistance against "the most important trend line of all time," according to technical analyst Carter Worth of Worth Charting.

Bond prices rise as interest rates fall, but amid a period of record inflation and an expanding economy, the Federal Reserve is raising interest rates to help cool down demand and tame inflation.

Now the widely-followed 10-year US Treasury yield is pushing against its 40-year downtrend line that starts with the 1981 peak in interest rates of 15.81%.

"The all-data log chart for US 10-Year Treasury Bond yields is the most important trend line of all time, ever, in any and all markets," Braxton tweeted on Monday. It's so important because whether the 10-year yield breaks higher or gets rejected and moves lower from here will have wide ranging implications for the stock market and risk asset pricing in general.

If the 10-year US Treasury yield decisively breaks above its 40-year downtrend, that could be seen as the start of a new uptrend, which would mean a continued rise in interest rates and ongoing pressure on stock prices. But if the 10-year yield gets firmly rejected at the downward sloping trend line, one could expect a continuation of lower interest rates for longer, which could help boost valuations for risk assets and drive stock prices higher.

"This is the exact same trend line in effect since the 1981 peak, and that line comes into play at 2.81% ... how we react to this line really determines a lot. Were we to back away because recession type things are coming, or do we really push through in a meaningful way," Worth said to CNBC on Monday, adding that he doesn't believe there's much room left for yields to advance higher.

If Worth is correct in his assessment, that would be a welcome sign for stock market investors, who already suffered a more than 10% correction in the S&P 500 earlier this year.

But the 10-year US Treasury yield hit 2.83% on Thursday, which is slightly above the line in the sand that Worth is closely monitoring. Unless yields quickly halt their upward trajectory, the going could get even tougher for the stock market.

The Fed's plan to hike interest rates by 0.50% in May could be the final nail in the coffin for the 10-year Treasury yield to end its 40-year downtrend and start a new long-term uptrend, effectively ending a decades long bull market in bonds.