Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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.


© 2005-2022 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