Wednesday, September 15, 2010

Bonds

Below is the Daily Trend Model for the 30-yr Treasury Yield.  Two two salient points are five waves down and a recent Trend Buy Signal:

30-yr Treasury Yield Daily Trend Model


Below is the TBT Daily Trend Model.  The key point here is how closely the TBT tracks treasury yield:

TBT Daily Trend Model

Reaching the previous 4th wave high would be a move of about 10%.  But the EW analysis on the yield chart is suggesting much higher interest rates and by implication, a more significant move up for TBT.


A

5 comments:

Anonymous said...

ps. adding another 5000sh of NNVC today. Some kind of lethal virus around that no antibiotic can fix so far. . . . This is also a factor for silver to consider in its role as antipathogenic.


El conguero magnifico: Poncho Sanchez - Morning

Anonymous said...

Allan,

as we all know,interest rates and bond prices are inversely correlated.

Are you suggesting that yields will decline further and therefore prices go up from here?

In your comments you stated that both yields and prices are going up.Can't be both!!

Could you explain what your position is.

Thanks,

H

H.

Allan said...

TBT is an inverse Bond ETF, thus as yield goes up, bonds go down/TBT goes up.

Anonymous said...

I've noticed that as long-term interest rates go down, treasury yields go down. It's uncanny.

Anonymous said...

Look at TLT, the long-term government bond ETF. It has broken down through the 50-day moving average as has the Banking BIX and Homebuilding HGX indices.

Note also the similarity with January 2009 when it led the stock market down into the March low.

Equities and bonds can both go down because the investment environment is distorted by carry trades and the expectation of government purchases. When they both declined sharply in early 2009, they forced the Fed's hand...