CLICK ON CHART TO ENLARGE
The yield on the 30-year bond has remained inside of falling channel (A) for the majority of the past 17 years! It has been a great trade the range play, buy bonds when yields hit the top of the channel/bonds are at lows and the opposite is true as well….sell bonds when yields are at lows and bond prices are high.
This channel is not only a good trade the range for bonds….it has also been helpful per when to pick up equities!
The 2003 low in yields happend to be at the same time stocks were hitting lows too….same thing happened again last summer, in 2010. Yields were at low (bond prices at highs) as stocks were about to take off. Now the yield on the 30-year is at the same level as it was last summer.
More than once this situation was suggesting to sell strength (Govt bonds) and buy weakness (stocks). Different this time around?
Last week a condition was at hand and I suggested that a rally should be close at hand (see post here) That condition doesn’t conflict with the yield channel at all!