{"id":21362,"date":"2023-11-10T07:30:26","date_gmt":"2023-11-10T12:30:26","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=21362"},"modified":"2023-11-10T07:30:26","modified_gmt":"2023-11-10T12:30:26","slug":"weve-only-seen-this-four-times-in-four-decades","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/weve-only-seen-this-four-times-in-four-decades\/","title":{"rendered":"We\u2019ve Only Seen This Four Times in Four Decades"},"content":{"rendered":"

That should just about do it for the Treasury bond bounce.<\/p>\n

T-bonds have put on a blistering rally over the past three weeks. The iShares 20+ T-bond ETF (TLT) is up almost 9% since mid-October – which is a remarkable gain for a bond fund.<\/p>\n

But all short-term bounces must come to an end.<\/p>\n

The longer-term trend must reassert itself. And, in the world of T-bonds, that longer-term trend is down.<\/p>\n

Look at this long-term chart of the yield curve…<\/p>\n

<\/p>\n

\"Image\"<\/p>\n

Regular readers will recognize this chart as showing the difference between the yields on ten-year T-notes and three-month T-bills. The difference is normally a positive number – which makes sense because folks should get paid a higher interest rate for lending their money for a longer time period.<\/p>\n

For the past year, however, the yield curve has been inverted – meaning short-term rates have been higher than long-term rates. That is abnormal. It has only happened four other times over the past 40 years.<\/p>\n

And the current inversion is the most significant of all of them.<\/p>\n

Only two things can happen to fix this condition. Either short-term rates have to come down, or long-term rates have to go up.<\/p>\n

The Fed has indicated, repeatedly, that it plans to keep short-term rates “higher for longer.” In other words, short-term rates aren’t coming down. So, the only way this yield curve gets back to a normal condition is for long-term rates to go up.<\/p>\n

And higher long-term rates mean lower T-bond prices.<\/p>\n

Of course, nothing in the financial markets ever goes straight up or straight down for too long. There are corrections and bounces inside of every long-term trend. And three weeks ago, TLT had sold off so hard for so long that it was due for an oversold bounce.<\/p>\n

We wrote about it a few weeks ago<\/a>, even going so far as to put dotted lines on the TLT chart to project how we thought the bounce would unfold.<\/p>\n

Here’s an updated look at that chart…<\/p>\n

<\/p>\n

\"Image\"<\/p>\n

TLT has climbed all the way back up to its 50-day moving average line. It has worked off the oversold conditions. And it has achieved our short-term price objective.<\/p>\n

TLT is up 9% in three weeks. Most Treasury note investors need to wait two years to make that sort of return.<\/p>\n

Now though, it’s time to sell.<\/p>\n

<\/p>\n\n\n\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

<\/p>\n

Sure, TLT could rally a bit more from here. Anything can happen in the short term. But the long-term trend is lower. And that long-term trend could reassert itself at any moment.<\/p>\n

<\/p>\n

Best regards and good trading,<\/p>\n

\"Signature\"<\/p>\n

Jeff Clark<\/p>\n

<\/p>\n

<\/p>\n

\n

READER MAILBAG<\/h2>\n<\/div>\n

Are you watching TLT?<\/p>\n

Let us know your thoughts – and any questions you have – at feedback@jeffclarktrader.com<\/a>.<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

That should just about do it for the Treasury bond bounce.<\/p>\n","protected":false},"author":64,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-21362","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/21362","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/64"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=21362"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/21362\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=21362"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=21362"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=21362"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=21362"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=21362"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=21362"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=21362"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}