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The Next Move in Bonds has Big Implications

This is a follow-up to our February post in which we identified the conditions for treasury bond prices to decline into support and treasury yields to rise into resistance. Both of those moves appear to be nearing completion, making this month a candidate for reversal in bonds and yields.

On a monthly chart, the CBOE 30-year Treasury Yields Bond Index (TYX) is recognizing the first Fibonacci-derived resistance target at 30.92, and the high of the month was capped by a harmonic line of the channel we have drawn. From here, we believe the most likely scenario is for yields to test lower, and our main target area is between 19.00 and 20.75.

Treasury 30 year yield (TYX) - Monthly
Larger Image

A direct move from the current yield rate down to the lower target area probably would coincide with a similarly direct upward move in bond prices to produce a higher high. On our monthly chart for U.S. 30-year Treasury Bond futures, below, that would coincide with the support areas holding near 147^14 and/or the lower channel boundary.

US 30 Year Bond Futures - Monthly
Larger Image

On the other hand, if yields were to rise into the higher resistance target shown on the chart near 34.89, that would correspond with greater pressure being put on support in bonds. A breach of the lower edge of the bonds channel would be a significant piece of evidence against the prospect of another higher high in bonds. Such a development would lead us to move our alternate scenario to the forefront - the scenario in which bonds make a low nearby and rally to form a lower high in 2016 or 2017.

Some big moves are coming up in bonds as well as equity markets, and we are keeping our subscribers abreast of these developments with addititional charts and analysis on weekly and even daily time frames. We'd like to offer SafeHaven readers some exclusive charts and analysis that can help you catch the summer trades. Visit this page to let us know you would like us to send you some samples! Readers who request it this week will also receive an updated post with more detailed information on near-term treasury bond targets.

 

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