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Bond Market Crash Makes Fed Rate Hike A Near Certainty

Saturday, November 12, 2016 9:33
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From Corey Rosenbloom: After Tuesday’s US Election, we’ve seen rapid movement in the intermarket landscape, which includes a seismic shift in the bond markets.

Let’s focus on the sharp “Return to Trendline” movement for US Treasuries:

As I’ve been highlighting to weekly members, Bond Prices remain in a rising parallel trend channel.

With the negative divergences in the summer at the upper trendline, we’ve been expecting a larger reversal swing lower toward the rising lower trendline near 127.

After the election, we see price at this lower target sooner than expected.

We’re now watching the play away from the 127 pivot.

We can see the 10-Year US Treasury Yield and see the inverse pattern as rates spike rapidly:

With this chart, the 21 index level corresponds to the 2.1% Treasury yield.

Price is inverse yield.

We’re seeing the Yield spike into its upper trendline target near 2.1%.

It’s all-but-certain that the Federal Reserve will raise interest rates in December with this picture.

The iShares Barclays 20+ Year Treasury Bond ETF (NASDAQ:TLT) closed at $122.04 per share on Friday, down $0.69 (-0.56%). Year-to-date, the largest exchange traded fund tied to long term U.S. government bonds has now risen just 1.21%, and is down nearly 15% from its yearly highs.

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