The iShares 20+ Year Treasury Bond ETF (TLT) has been down since early August and the market ignored it, until this week.
This week, the 10-year Treasury bond yield hit an incredible 1.60% as it jumped about 50 basis points this month. The stock market shrank and traders began selling tech names left and right.
Let’s look at some graphics.
Then in this weekly chart of TLT points and figures, we used closing-only price data and the chart shows a double-bottom breakdown pattern with a potential price target of $ 115 down.
In this point chart and long-term charts of the 10-year US Treasury bond yield, we can see a target rising 2.38%, but a 2.00% trade will reach the part bottom of a long-term downtrend line.
The performance trend has been down on this chart since 2000, but it has actually been down since 1981. Thank you, Mr. Volcker.
A word about rates
Let’s talk about the backdrop of fees.
Housing prices have risen in many parts of the U.S. and many market watchers have linked rising asset prices and crude oil prices to the surge of stimulus money around the world.
Why should rising interest rates be such a “nightly” shock to the markets?
Fund strategy
A rise in the US dollar in the coming weeks could end the current commodity boom. The Fed could get nervous and do something to raise bond prices. Who knows?
Meanwhile, the TLT is on a bearish trend and I still don’t see any bearish action. A rebound can occur at any time, but it may not be enough to reverse the current trend.
The ten-year Treasury will likely move sideways around 1.50% for a while, but it could reach 2% later this year or maybe next year.
There are many moving parts, so try not to get too caught up in the day-to-day disorders.
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