Death Cross in BondsBonds have drifted lower since the start of August. There could now be signs of acceleration.
One important feature on the IShares 20+ Year Bond ETF is the declining 50-day simple moving, now on the verge on the crossing under the 200-day SMA. A “Death Cross.”
Next is the downward channel in place since early September. TLT failed at the top line yesterday and is just coming off it today.
Third is the double-top around $172 between late April and early August. This followed a blow-off spike in early March that’s never been regained. Viewed together, this kind of price action suggests a potentially major long-term top.
Bonds have benefited from this year’s coronavirus pandemic. But how long will that support remain? Monday's ISM manufacturing report and today’s non-farm payrolls showed the economy is improving. The election might not be resolved yet, but fiscal stimulus grows more likely the closer we get to January. Those trends would argue in favor of higher yields and lower prices.
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