Friday, 30 October 2015

US Bonds update

Whilst equities traded in a very tight range, there was more notable movement in US bonds. TLT settled lower by a rather significant -1.5% @ $121.91. Broader price structure is increasingly tight, with various indicators suggestive that bonds are vulnerable.

TLT, daily

TLT, weekly

TLT, monthly2


*yes Doug, this post is due to you.

I realise few care, but the bond market does have relevance for those who only trade equities.

Often is the case, bonds can lead equities, or provide indirect confirmation of an equity turn/move.

What next for bonds?

Daily cycle... a clear black fail candle at declining resistance a few days ago, confirmed with today's sig' decline.

Weekly: the third consecutive weekly candle with a somewhat spiky top... bearish

Monthly: another blue candle, trading under the monthly 10MA.... a lower high... bearish

Broadly, bonds look highly vulnerable to much lower levels - first target for TLT would be the $100/95 zone, not least if the Fed does eventually raise rates.. even if only a little.

Interest rates...

Fed rates, with sp'500

It should be obvious to almost anyone that the US Federal reserve has always been REACTIVE to events, it has never been proactive. Rates have always been raised too late in each economic cycle, and it remains hugely ironic that each time the Fed does cut rates, it is a key signal of impending economic/market doom.

Closing update from Riley

Looking ahead

Friday does have an array of data... pers' income/outlays, Chicago PMI, employment costs, consumer sent'

The market is expecting a PMI of 49.2... which by definition is fractionally recessionary.

*Fed official Williams is due to speak at 10am on the 'direction of interest rates'.  I would imagine the market will take some notice of that.

Goodnight from London