Best of the Week
Most Popular
1. Best Cash ISA Savings Account for Soaring UK Inflation - February 2018 - Nadeem_Walayat
2.Gold Price Forecast 2018 - February Update - Nadeem_Walayat
3.Bitcoin Crypto Currencies Crash 2018, Are We Near the Bottom? - Nadeem_Walayat
4.Trump Bubble Bursts, Stock Market Panic Dow 1175 Point Crash Analysis - Nadeem_Walayat
5.Gold Corrects, Bitcoin Markets Crash, Whilst Stocks Plunge - Nadeem_Walayat
6.US Treasury Bonds: Fuse to Light the Bonfire - Jim_Willie_CB
7.Dow Falls 666 Points As Cryptocurrencies Crash And Krugman Emerges From His Van - Jeff_Berwick
8.Stock Market Roller Coaster Crash Ride Down to Dow Forecast 23,000 - Nadeem_Walayat
9.Trading the Shadows - Oil, Dollar, Stocks, Gold Trend Analysis - B.R. Hollister
10.Stock Market Analysis: Baying for Blood - Abalgorithm
Last 7 days
How Inflation Reduces The Real Value Of Social Security Net Of Medicare Premiums - 19th Feb 18
Could Stellar Lumens be a Challenger to Bitcoin for International Payments? - 19th Feb 18
US-China Trade War Escalates As Further Measures Are Taken - 19th Feb 18
How To Trade Gold Stocks with Momentum - 19th Feb 18
Is a New Gold Bull Market on the Horizon? - 19th Feb 18
Stock Market Decision Point! - 19th Feb 18
An Inflation Indicator to Watch, Part 1 - 18th Feb 18
Get on Top Of Debt Before It Gets on Top of You - 18th Feb 18
Will the Stock Market Make a Double Bottom? - 18th Feb 18
5 Reasons Why Commodities Are the Investment Place to be in 2018 - 18th Feb 18
1 Week Later, Stock, Bond Market Risk Remains ‘On’ as 2 of 3 Amigos Ride On - 17th Feb 18
Crude Oil Prices: A Case of Dueling Narratives? - 17th Feb 18
Free 1000 Youtube Subscribers Services - YTpals, Subpals, SubmeNow Test - 17th Feb 18
How to Trade as We Near March Stock Market Top - 16th Feb 18
Bitcoin as Poison - 16th Feb 18
GDX Gold ETF Weathers Stock Market Selloff - 16th Feb 18
Casino Statistics and Demographics - 16th Feb 18
IS Today Thee Stock Market Turn Day? - 16th Feb 18
Huge SMIGGLE Shopping HAUL, Pencil Cases, Drinks Bottles, Back Packs, Toys.... - 16th Feb 18
Tesla Cash Keeps Burning at $320 a Share - 15th Feb 18
Big Conflict Ahead in the Financial Markets - 15th Feb 18
Stocks Extend Rally Off Friday's Low, But Short-Term Exhaustion Near - 15th Feb 18
Stock Market Out on a Limb... - 15th Feb 18
Things Only a True Friend Would Say About Gold - 14th Feb 18
Global Debt Crisis II Cometh - 14th Feb 18
Understanding Crude Oil Behavior - 14th Feb 18
Stock Market is Getting Scary... - 14th Feb 18
Stock Market - This Time is Different. Really?! - 13th Feb 18
Gold and Silver Long-term Buy, Short-term Sell Signal - 13th Feb 18
SPX Futures Are Sliding... - 13th Feb 18
Stock Market Topping Process Begins. The Bubble Finds its Pin - 13th Feb 18
Math Behind the Stock Market Crash and What’s Next – PART2 - 13th Feb 18
Gold Stocks Groundhog Week - 13th Feb 18
Platinum Looks Poised for Surprising Gains This Year - 12th Feb 18
Friday's S&P 500 Stock Market Bounce To Continue, But Selling May Resume - 12th Feb 18
The Inflation Trade and Bond Yields Rising Result in Equities Correction - 12th Feb 18
February 2018 Stock Market Crisis – What Next? - 12th Feb 18
How To Profit From The Bitcoin Bloodbath - 12th Feb 18
The Philippine Economic Dream Could Be Within the Reach  - 12th Feb 18
Is the Stock Market Correction Over? - 12th Feb 18
What Does the Stock Market Decline Mean for Gold - 12th Feb 18
Addicted to SMIGGLE Mega Review, Pencil Cases, Stationary, Back Packs, Drinking Bottles, Toys... - 12th Feb 18
Best Cash ISA Savings Account for Soaring UK Inflation - February 2018 - 11th Feb 18
The Fed’s Impossible Choice, In Three Charts - 11th Feb 18
US Stock Market, Gold, Silver and the Macro Backdrop - 11th Feb 18
After Two weeks of Stock Market Decline, People Are Ssking, “Are We There Yet?” - 11th Feb 18
How to Grow Tomatoes From Seeds, Homegrown Organic Money Saving Gardening - 11th Feb 18
Youtube KILLS ALL Small Channels with New DeMonetization Rules - 11th Feb 18

Market Oracle FREE Newsletter

Urgent Stock Market Message

Is The 37 Year Bullish US Treasury Bond Market Ending?

Interest-Rates / US Bonds Feb 07, 2018 - 06:35 PM GMT

By: ElliottWave-Forecast

Interest-Rates

The bond market has enjoyed a strong bull market for nearly four decades with yields continuing to go lower. The bull market has been going on for so long that no current active fund manager can imagine what it looks like when interest rates were to be like the 1980s at 20%. If people in the 1980s started trading in their early thirties, they would have been almost 70 years old by now, so chances are they are not active in the market anymore.


The dot com bubble and 2008 financial crisis continue to turbocharge the great bond bull rally with central banks cutting interest rates around the world and multitrillion-dollar-bond-buying programmes. However, the period of easy money could be ending this year. The Fed, ECB, Bank of Japan have all started to taper their bond purchase program. The Fed is the first one to stop the bond buying program and it’s also the first to embark in balance sheet normalization, or QT (Quantitative Tightening). As Central Banks have been big buyers of bonds for the past decade, questions arise as to whether this shift to tapering would finally prompt the great bull market to end.

The markets have enjoyed monetary support from global central banks for the past 10 years. When the Federal Reserve stopped its quantitative easing programme in 2014, the Bank of Japan took the baton with an even bigger scheme. When the Fed started raising rates in 2015, the European Central Bank (ECB) started a new quantitative easing programme. Last year, Central Banks bought $1.5 trillion of bonds.

But this year investors for the first time in a decade, central banks can be withdrawing money from the market. The Fed has started to slowly shrink its balance sheet last year. This month, the ECB’s bond buying reduced by half to €30 billion a month and the programme would likely end this year. Bank of Japan’s purchase of long-dated bonds had also slowed.

Indeed the bond market has started to decline and as a result the yields have been going up as the charts below show:

Weekly Chart of 10 Year Notes (ZN_F)

Ten Year Note (ZN_F) shows a bearish sequence from 7.2012 high (135.15) as well as from 7.2016 high (131.35). The instrument shows 7 swing sequence (in black color) from 7.2012 high and the minimum 100% target at 120.3 has been reached. However, there is another sequence (red color) starting from 7.2016 high and this sequence only shows 5 swing, thus another leg lower is expected to end 7 swing from 7.2016 high and also 7 swing from 7.2012 high.

TNX (10 Year Yields) Daily Chart

10 Year Yields (TNX) is the inverse of ZN_F (10 Year Notes) and the yield shows 3 swing bullish sequence (higher high) from 7.2016 low. 10 year yields potentially can target 3.31 – 3.61% this year to end the third swing. Thus the charts above suggest that 10 Year Notes will continue to sell and 10 year yields will continue to rise this year.

But the bigger question is whether the 38 year bull market in the bonds has ended. We will look at the two long term charts of TNX below: One using linear scale and another one using logarithmic scale

Long Term Charts of 10 Year Yields (TNX) Linear Scale

Looking at the long term charts of 10 year Yields since the 8.1981 high (15.84)%, we can see that the yields have broken above the parallel channel drawn from 8.1987 high. At first glance, this suggests the possibility that the yields may have ended cycle from 8.1987 high and possibly from 8.1981 high as well. However, since we are looking at very long term chart, it’s useful to also look at it using logarithmic scale, which is usually more accurate for a long term chart

Long Term Charts of 10 Year Yields (TNX) Logarithmic Scale

Looking at 10 year yields with logarithmic scale, we can draw a trend line from 8.1981 high and so far the yields have not broken and closed above it which comes around 3.05 – 3.10% and descending by 0.05% every month approximately.

Since usually logarithmic scale is more relevant in long term charts, the 10 year yields need to break and close above 3.1% with conviction before the 38 year bull market in the bond could be considered ending.

If you enjoy this article, check our work and join Free 14 days Trial to see Elliott Wave Forecast in 78 instrument, as well as getting access to Live Trading Room, Live Session, and more

By Ayoub Ben Rejeb

https://elliottwave-forecast.com

ElliottWave-Forecast has built its reputation on accurate technical analysis and a winning attitude. By successfully incorporating the Elliott Wave Theory with Market Correlation, Cycles, Proprietary Pivot System, we provide precise forecasts with up-to-date analysis for 78 instruments including Forex, Commodities, Indices and a number of Stocks & ETFs from around the World. Our clients also have immediate access to our proprietary Actionable Trade Setups, Market Overview, 1 Hour, 4 Hour, Daily & Weekly Wave Counts. Live Screen Sharing Sessions, Daily Technical Videos, Elliott Wave Setup and Weekend videos .

Copyright © 2018 ElliottWave-Forecast - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 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