There is no doubt in my mind that we have seen the lows in yields for Treasuries perhaps for the rest of my lifetime. The long bond has topped out on its price chart indicating an end to the THREE DECADE LONG bull market in bonds. While that does not mean we cannot get some intervals during which interest rates move lower again, I do not expect to see the long bond to ever again exceed the top shown on this chart. If it were, it would signify a PROLONGED DEPRESSION the likes of which would be difficult to envision.
The weekly chart is also showing a rising ADX line indicating the start of a trending move, in this case to the downside. I find this rather interesting because I believe that the Fed does not want rising long term interest rates. For whatever reason, the chart is showing that the bond market is expecting the exact opposite.
Already today the Ten Year hit a TWO YEAR HIGH yield of 2.864% at one point before settling the day at 2.829%. Think about this - it was just 14 basis points shy of hitting 3% today! I wonder how that is going to play with the real estate/housing markets?
There is obviously rotation going on with money moving out of bonds but whether or not the majority of that is going into equities is a bit unclear to me. It sure seems like some of it is heading back into the base metals/precious metals and certainly the mining shares right now. One thing is clear - it sure ain't going into the home building stocks!
Also, check out the home builders ETF, XHB, and look at the break in the uptrend. It sure seems to me like the Street is noticing this rise in interest rates and is treating the homebuilders accordingly with an expected negative impact to the industry. If the Street sees it, my guess is that the Fed is also seeing this and is not happy!
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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