In order to change the secular trend in the 30yr yield…

The 30 year Treasury bond yield is in its multi-decade downtrend until the November, 2018 high is taken out

In early 2021 we projected the potential for an Inverted H&S, which would theoretically measure to the 4% area on the long bond, at the lateral resistance area noted on the chart. That would set a new trend in the secular picture for the yield and also usher in a completely different macro and hence, a completely different set of investment strategies as the Fed would lose its primary foil for all that inflationary policy it has routinely produced over recent decades. In other words, it would blow the Fed’s cover of supposed deflationary pressure as the inflated chickens come home to roost.

TYX is taking out the limiters hard and with a downward reversal unlikely in April, it would paint a breakout candle above the limiters. I have seen analysts I respect call it a new trend in the long bond’s yield with a bond bear market now beginning. But that is not the case; at least not yet. Until the November, 2018 high is taken out the series of major lower lows and lower highs is intact.

I look at this chart in awe about how the depths of the panic in 2020 produced exactly what I’d expected (and then some) in the midst of that crisis. But these monthly candles take forever to play out. We forget. We get distracted. But I clearly remember anticipating the next ping of the limiters as far back as mid-2020. And boink, here we are… and then some.

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This Post Has 2 Comments

  1. Imagine back filling the double green after this inaugural address of change of trend first. on a simple pattern basis you could argue then that a break of whatever yield high we strike here would set up a measured move to the double dotted reds above.

  2. terry

    To your point, the April candle has stopped at the downtrend line from the 2007 wick. I would expect at least a short term stall.

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