Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
The Central Bank Time Machine - 23rd Aug 19
Stock Market August Breakdown Prediction and Analysis - 23rd Aug 19
U.S. To “Drown The World” In Oil - 23rd Aug 19
Modern Monetary Theory Could Destroy America - 23rd Aug 19
Seven Key Words That Explain "Stupidly High" Bond Market Prices - 23rd Aug 19
Is the Fed Too Late Prevent A US Housing Bear Market? - 23rd Aug 19
Manchester Airport FREE Drop Off Area Service at JetParks 1 - Video - 23rd Aug 19
Gold Price Trend Validation - 22nd Aug 19
Economist Lays Out the Next Step to Wonderland for the Fed - 22nd Aug 19
GCSE Exam Results Day Shock! How to Get 9 A*'s Grade 9's in England and Maths - 22nd Aug 19
KEY WEEK FOR US MARKETS, GOLD, AND OIL - Audio Analysis - 22nd Aug 19
USD/JPY, USD/CHF, GBP/USD Currency Pairs to Watch Prior to FOMC Minutes and Jackson Hole - 22nd Aug 19
Fed Too Late To Prevent US Real Estate Market Crash? - 22nd Aug 19
Retail Sector Isn’t Dead. It’s Growing and Pays 6%+ Dividends - 22nd Aug 19
FREE Access EWI's Financial Market Forecasting Service - 22nd Aug 19
Benefits of Acrobits Softphone - 22nd Aug 19
How to Protect Your Site from Bots & Spam? - 21st Aug 19
Fed Too Late To Prevent A US Housing Market Crash? - 21st Aug 19
Gold and the Cracks in the U.S., Japan and Germany’s Economic Data - 21st Aug 19
The Gold Rush of 2019 - 21st Aug 19
How to Play Interest Rates in US Real Estate - 21st Aug 19
Stocks Likely to Breakout Instead of Gold - 21st Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 21st Aug 19
WAYS TO SECURE YOUR FINANCIAL FUTURE - 21st Aug 19
Holiday Nightmares - Your Caravan is Missing! - 21st Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

Did U.S. Treasury Bonds Just Get Stumped by Trump?

Interest-Rates / US Bonds Nov 12, 2016 - 10:17 AM GMT

By: EWI

Interest-Rates

The answer to where T-Bonds are headed is not in the news headlines about Trump. It's in the Elliott wave pattern

On November 9, the United States woke to the biggest political shock since Harry Truman defeated "shoe-in" Thomas E. Dewey in the 1948 U.S. presidential election.

For U.S. bond investors, the 2016 election has been head-spinning too.


In the weeks leading up to the November 8 vote, the ground beneath U.S. Treasuries seemed as stable as log-rolling competition. Have things calmed down now that Donald Trump has been named the next leader of the free world?

Not at all. If anything, things have gotten worse. As these November 9 news items make plain, bonds continue to be stumped by Trump:

Trump victory is bearish for bonds; i.e. yields rise and prices fall -- "Long-dated Securities Drop as Trump Seen as Spendthrift President." (Bloomberg)

Trump victory is bullish for bonds; i.e. yields fall and prices rise: "Investors dashed into the perceived shelter of U.S. Treasury bonds, crushing yields, on speculation that Donald Trump will win." (Financial Times)

Again, Trump victory is bearish for bonds: "Treasuries Selloff Following Trump Victory." (Barron's)

No, just kidding. Trump win is bullish for bonds: "Treasuries Lead Global Bond Rally as Trump Set to Win Election" (Bloomberg)

Back and forth, and back and forth, with no end in sight. It's the worst-possible scenario for investors seeking clarity into where U.S. treasuries will trend in the coming days and weeks.

Now for the good news: The near- and long-term trend changes in Treasuries are not tied to the ever-shifting opinions about Trump. In our opinion, they are driven by investor psychology, which unfolds in Elliott wave patterns on price charts.

To see some evidence of that, let's remove the alleged "Trump" card for a second and review the recent performance in the 30-year Treasury bond market.

In July of this year, the 30-year Bond yield was circling the drain of an all-time record low for the biggest bond-prices bull market in over 50 years.

At the time, the news du jour wasn't Trump, it was Brexit; specifically, the June 23 referendum vote by Britain to leave the European Union.

According to the news-moves-markets' pundits, the Brexit bombshell was set to keep the risk-aversion fire ablaze -- and by proxy, bond yields cold as ice. Here, these July 1 news items capture the sentiment at the time:

"There's no natural boundary for yields on the low end. 10-year yields at 1% or even lower by year-end, while the 30-year yield could take another 100 basis point tumble, that decline would be easy." (Reuters July 1)

"I think we just have to accept that this is a low yield world until further notice." (L.A. Times July 1)

But in our opinion, the one-sided bullishness surrounding bond prices, combined with a near-complete Elliott wave pattern, suggested the bond price rally was coming to an abrupt end. Our July 1 Financial Forecast's Short Term Update sounded the alarm first:

"The Daily Sentiment Index of bond traders is up to 95% bulls and the Commitment of Traders data shows that Large Specs (as % of OI) were at 15.44% as of two weeks ago, an all-time record net-long position.

"The belief that bond prices will continue to rally and yields will continue to decline is near universal, which, ironically, is exactly the condition that attends trend reversals.

"A decline through 173^05.0 will indicate that a top in prices is in place. Prices could fall another 5-10 points very quickly thereafter."

The next chart shows that, despite the daily knee-jerk reactions to Trump's nomination (and now, victory) yields have indeed kept a steady course to the upside, with prices to the downside:

Bond market volatility surrounding the presidential election isn't going to die down any time soon.

Fortunately, that won't interrupt your ability to gain objective insight into the world's leading bond market -- should you choose the Elliott wave method as your road map.


Unleash the power of the Wave Principle

Much like a great sports play; to appreciate a great market forecast, you have to see it. In fact, we'd like to show you four. Our examples do indeed show what can happen when Elliott analysis meets opportunity. But we're not asking you to attend a class in 'good calls.' In each of these four markets, the unfolding trends have (once again) reached critical junctures. You really, really want to see what we see, right now.

Get your report -- How to Find Real Opportunities in the Markets You Trade -- FREE

This article was syndicated by Elliott Wave International and was originally published under the headline Did U.S. Treasury Bonds Just Get Stumped by Trump?. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

About the Publisher, Elliott Wave International
Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world's largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules