I sold my large 10-Year Treasury Note position in January of this year, after a 12 months holding period. At that juncture I wasn’t yet confident about what the FED bureaucrats were about to do or how aggressive they would be. That ended up being a good move as treasuries have remained in a fairly tight trading range over the last 10 months.
With that in mind, I believe the picture has now clarified as I shift back to my original assessment. That is, we will see a double bottom in rates before this bear market of 2015-2017 in equities completes itself. And as my previous posts indicate, I believe the FED will no longer raise interest rates at this juncture. Particularly, if the stock market takes a beating, something that I very much expect, while the US Economy slides back into a recessionary environment. Something that is now becoming evident.
Generally speaking, the BOND Market is more intelligent. Yields not surging higher is indicative of what the bond market sees. What does it see? Exactly that, a significant recession and a possible bear market.
Finally, 30-Year bear markets in Bond Yields DO NOT end in a V shape fashion. Typically there is a double or a triple bottom. Plus, there is a number of large gaps in the 10-Year treasury, suggesting that the bond market will retest it’s 2012 and 2013 yield lows. Possibly taking the market as low as 1.5-1.6%.
Impossible? On the contrary, that is exactly what I expect to see over the next 12-24 months. As the FED itself suggested, the next round of QE and negative interest rates might be just around the corner.
10-Year Note: All Systems Are A Go For A Double Bottom Google
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