Loading ...Bonds Just HAVE TO GO DOWN!? Uh… no…
My thesis, formed for many reasons, is that money will pour into the United States like nothing we’ve seen before driving the U.S. Dollar above 160, the Dow to 100,000, and with less conviction I believe into bonds.
If this is going to happen bonds better find support pretty quickly. Almost all the charts for bonds are pretty negative but I did just find this long term linear parabola on TLT. We could be at point 4 of a continuation pattern up at this time which will be counter to the entire crowd’s thinking…
Go back far enough on a log chart and there are other lines of support not much further down for TLT.
This could be wishful thinking! I’m having a home built and it should be done in 5 months. Been watching bonds hoping the rates come back down! Lol 🙂
The alternative view is that’s a massive H&S that has built out. Either way, we’ll know soon enough.
Turning back to SM’s, looks like a massive bearish rising wedge is building out on $SPX. Hot off the press, will post now.
Ok. Thanks.
And YES that big H&S has me nervous. Been watching it for months as I’m buying this house!
My wishful thinking makes me hope bonds get money poured into them with everything United States and now is the turning point.
Chuck, these charts are hinting pretty loudly that before we get to those lower rates you are seeing we have a problem in that the charts show higher rates beckoning. Now I will concede that once rates rise it could pop the bubble and then they come tumbling back down, but before then rates sure look like they have an appointment with UST 10 y 5.0%
Below we see any drop in rates on the long bond is likely just a BT to the break of the H&S NL
https://stockcharts.com/h-sc/ui?s=%24USB&p=W&yr=5&mn=0&dy=0&id=p16458663905&a=580447315&listNum=239
Below we see the 10 Y breaking up through its NL and the long term downtrend line
https://stockcharts.com/h-sc/ui?s=%24UST10Y&p=W&yr=5&mn=0&dy=0&id=p94374757323&listNum=239&a=580447997
And now the punchline: One can’t escape the observation that what we have here is a long term secular bottom to a 35 year bull market in bonds. We see a double bottom and now a break above two lines. As I mentioned it is possible to come back down to lower lows, but think of how it must reverse these charts to do it
https://stockcharts.com/h-sc/ui?s=%24UST10Y&p=W&yr=40&mn=0&dy=0&id=p39724699127&listNum=239&a=580447997
I like the last chart. The H&S’s? Can easily reverse being the opposite of the current bearish/bullish patterns BUT on that long term chart that does look like a real deal breakout.
My data on my cheap stockcharts subscription doesn’t go back that far. Thanks for sharing.
So hypothetical for you:
Say money comes ripping into America from overseas… could everything United States go up at once including bonds driving down yields?
But… if the stock markets keep ripping up, wouldn’t the Fed increase rates? But what really is the initiator driving rates? The market or the Fed? If there is tons of demand driving down the short and long term rates would the Fed hold off raising?
Lots of questions. Sorry.
I really want rates to go back down atleast 5 more months till I’ve got this new mortgage 🙂
The premise that the FED is driving rates higher is of course the most laughable proposal ever. The FED lags the market. They raise rates simply to attempt to track the market to maintain their “perceived” credibility. So what is driving rates higher? A mature cycle and markets are going to have to clear and the amount of debt financing with a tax cut I might add is going to knock the socks off of the T-bill market.
Now as I mentioned this “pin” that is headed out way will likely burst the bubble and at that time yes rates could come tumbling down to even new lows. But until the bubble gets popped rates look to be going higher.
As far as money coming ripping into the USA. Forget about it. The only way this happens is after the bubble pops the USD gets stronger as it is the senior reserve currency and a debt deflation drives money into the center of the financial capital. This is what has always occurred in a post bubble contraction.
So the driving force to lower yields is not something we actually want to hope for as it would be a debt deflation. Will it happen? We don’t know, but we are set-up for it to happen. It’s going to be interesting to watch.
But here is the good news takeaway. Guess what goes up in a debt deflation? Gold does, at least the the real price of gold. That’s why my analysis is that we have already begun a bull market in gold (Dec 2015) We are now in early phase II. Its slow and informed investors are now doubting their investment premise. It is what I refer to the buy spot. It is actually the safest time to buy into this sector.
Great points. Thanks for sharing your insights.