Gold News

Bond-ageddon!

Well no, not yet. These charts put the bond 'crash' in perspective...
 
The WORLD is getting hyped up about bond yields lately with bonds of all stripes declining, writes Gary Tanashian in his Notes from the Rabbit Hole, as if we are in the midst of a debt Armageddon.
 
Instead, we are and have been in the midst of a decades-long and still intact 'debt for growth' Ponzi operation). Here is some perspective, starting with the 10-year US Treasury Note...
 
 
Here's the weekly chart with a trend-line and a lateral support cluster...
 
 
Or how about the Eurozone's Bund on a daily chart...
 
 
...compared with the same "crash" in prices seen on the weekly chart with trend line and lateral support?
 
 
Here is the daily chart status of 30-year Treasury bond yields (ie, long-term) which of course go inverse to bond prices...
 
 
And here is the ratio of junk bonds (ie, high-yielding debt, tracked as the HYG ETF) to long-term Treasury bonds (TLT). Looking mighty similar, eh?
 
 
So is bond risk on or off? Is equity risk on or off? Junk rising vs. Treasury bonds usually indicates the former in each case.
 
Finally, 'the Continuum' ©...our long-standing arbiter chart of the current system...remains intact. Indeed, considering the bond yield hype in play already, I have significant doubts that the Continuum is even going to make another hit of the 100-month EMA (red dotted line) any time soon.
 
 
The chart above has served as the backbone to the current system of debt for growth and it is nowhere near breaking.
 
We have fully expected an 'inflation bounce' and associated bond revulsion (yields rising in tandem). But the Continuum is intact and so is the system.
 
Filter hype, now as much as ever. There is growing talk out there about 'the end of the 35 year bond bubble'. When the dotted line breaks, the system will have done something it has not done in the post-Volcker era. Until that happens, keep b/s detectors at the ready.

Gary Tanashian successfully owned and operated a progressive medical component manufacturing company for 21 years, through various economic cycles. This experience gave Gary an understanding of and appreciation for global macroeconomics as it relates to individual markets and sectors. Along the way, Gary developed an almost geek-like interest in technical analysis (TA), to add to a long-time interest in human psychology. Various unique macro market ratio indicators were also added to the mix, with the result being a financial market newsletter, Notes From the Rabbit Hole (NFTRH) that combines these attributes.

See the full archive of Gary Tanashian.

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