The iShares 20+ Year Treasury Bond (TLT) ETF has been declining since early August, and the market has been ignoring it – until this week.
This week, the yield on 10-year treasury bonds reached an incredible 1.60% as it rose about 50 basis points this month. The stock market fell and traders began to sell technology names left and right.
Let’s check some diagrams.
In this weekly chart of points and figures in the TLT, below, we used close-up price data, and the chart shows a double-bottom breakdown model with a potential price target of $ 115.
In this long-term chart of 10-year U.S. Treasury bond yield points and figures, we can see an upward target of 2.38%, but a 2.00% transaction will hit the bottom of a downtrend line on long term.
The yield trend has declined on this chart since 2000, but has actually declined since 1981. Thank you, Mr. Volcker.
A word about tariffs
Let’s talk about the background of tariffs.
House prices have risen in many parts of the US and many market watchers have linked rising asset prices and crude oil prices to the flood of stimulus money around the world.
Why should rising interest rates be such an “overnight” shock for markets?
Basic strategy
A rise in the US dollar in the coming weeks could dampen the current commodity boom. The Fed may be nervous and do something to raise bond prices. Who knows?
Meanwhile, TLT is on a downward trend and I still do not see any action to lower the price. A jump could happen at any time, but it may not be enough to reverse the current trend.
The 10-year treasury is likely to move sideways around 1.50% for a while, but could reach 2% later this year or maybe next year.
There are a lot of moving parts, so try not to get too caught up in the daily squeaks.
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