US treasury bond yields have been trending lower for over 3 decades. Could the latest drop mark a significant low for bond yields and interest rates?
In today’s chart, we can see that interest rates have had several spike lows and highs, but that each low is lower and each high is lower. That’s the definition of a downtrend. BUT, each of these spike lows has resulted in big rallies within the downtrend channel. And each of these lows and subsequent rallies have been marked by significant momentum lows (see each green line and shaded box).
So is it time for short-term yields to rally?
Looking at the current set-up, we can see that yields spiked down to the lower trend line support while momentum hit is lowest level in 20-years. This could be signaling a bottom in interest rates. And this could have a major impact on bonds, banks, and the broader economy.
So put this on your investor radar… Is it rally time for bond yields and interest rates? Or will it be different this time? Stay tuned!