{"id":28169,"date":"2026-08-04T07:30:00","date_gmt":"2026-08-04T11:30:00","guid":{"rendered":"https:\/\/jeffclarktrader.com\/market-minute\/?p=28169"},"modified":"2026-08-04T09:24:02","modified_gmt":"2026-08-04T13:24:02","slug":"heres-the-next-sector-set-to-rally","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/heres-the-next-sector-set-to-rally\/","title":{"rendered":"Here\u2019s the Next Sector Set to Rally"},"content":{"rendered":"

Get ready for the biggest Treasury Bond rally of 2026.<\/p>\n

That sounds crazy, I know. After all, Treasury bonds have been horrible investment this year. The iShares 20+year Treasury Bond ETF (TLT), for example is down 3% so far for 2026 versus a 10% gain in the S&P 500. But, for reasons I\u2019ll explain in a moment, that\u2019s about to change.<\/p>\n

Granted, almost no one is looking for a Treasury bond rally. The US Government is projected to run a $2 Trillion budget deficit this year, and a $2.4 Trillion deficit for 2027. They\u2019ll need to issue Treasury bonds to fund the budget. On top of that, $9 Trillion of the $40 Trillion government debt that already exists is scheduled to mature this year. It will be \u201cre-financed\u201d by issuing new Treasury bonds to pay of the maturing issues.<\/p>\n

All of this new debt creates an enormous supply of Treasury bonds coming to market over the next few months.<\/p>\n

Meanwhile, demand for US Treasuries has been falling. The poor performance of T-bonds this year has retail investors, pension funds and institutions looking elsewhere to generate returns. They\u2019re increasing allocations to stocks, and cutting back on bonds. Foreign governments have also been reducing their Treasury bond purchases.<\/p>\n

This combination of increased supply and reduced demand has helped to push the price of T-bonds lower, and explains why they\u2019ve generated a negative return so far this year.<\/p>\n

None of this, however, is new information. We\u2019ve known about the government deficits. We\u2019ve known about the large refinancing needs. We\u2019ve known foreign governments have been net-sellers of Treasury bonds.<\/p>\n

All of that knowledge is reflected in the price. In other words, the market has already discounted the supply\/demand imbalance. Treasury bonds have sold off in anticipation of the outcome of these conditions.<\/p>\n

And now\u2026 Treasury bonds are ready to rally, for two reasons \u2013 a simple one, and a \u201cfourth dimension chess\u201d one.<\/p>\n

The Simple Reason T-Bonds Will Rally<\/h2>\n

Relative to the S&P 500, Treasury bonds are as cheap as they\u2019ve been in over a decade. In other words, this year\u2019s -13% relative performance versus the stock market is the worst the Treasury market has seen in ten years.<\/p>\n

This sets up the potential for a snap-back rally in T-bonds, or a snap-back decline in the stock market, or some combination of the two.<\/p>\n

Look at this 20-year ratio chart comparing the performance of TLT to the S&P 500\u2026<\/p>\n\n

\"\"<\/figure>\n\n

When this chart is rising it means TLT is outperforming the stock market. That usually happens during turbulent times when investors seek safety \u2013 like during the Great Financial Crisis of 2008-2009, and the COVID pandemic of 2020.<\/p>\n

Most of the time, though, this chart is falling \u2013 meaning stocks are performing better than bonds. That makes sense. After all, the S&P 500 has achieved an average 11% annual return over the past 20 years versus less than 4% for TLT.<\/p>\n

In order to recognize when the underperformance of TLT has reached an extreme level, and is therefore ready to rally, we need to add Bollinger Bands to this chart.<\/p>\n

Bollinger Bands help to define the most probable price range for a stock or an index. When that stock or index trades outside of its Bollinger Bands it indicates an extreme condition that most likely is setting up for a reversal.<\/p>\n

Here is a one-year chart of TLT versus the S&P 500, along with the Bollinger Bands\u2026<\/p>\n\n

\"\"<\/figure>\n\n

On Friday, this chart closed below its lower Bollinger Band \u2013 indicating an extremely oversold condition in TLT versus SPY. The last time we saw a similar setup was in early February.<\/p>\n

Back then, the S&P 500 fell 9% over the next two months while TLT rallied 5% in one month.<\/p>\n

This is the simple reason to expect TLT to rally over the next few weeks. There is, however, a more complex reason. And, we\u2019ll take a look at that reason on Friday\u2026<\/p>\n

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

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

Jeff Clark
\nEditor, Market Minute<\/em><\/p>\n

P.S. <\/strong>I just shared my favorite way to play this situation with subscribers of my entry-level trading service, Jeff Clark Trader. <\/em>Similar situations have played out with triple-digit gains in a matter of weeks – sometimes a few days. Check it out right here<\/a>.<\/p>\n\n\n\n","protected":false},"excerpt":{"rendered":"

Get ready for the biggest Treasury Bond rally of 2026.<\/p>\n","protected":false},"author":2759,"featured_media":0,"comment_status":"closed","ping_status":"0","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-28169","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"ai_tts_audio_outdated":false,"ai_tts_content_changed_at":"","ai_tts_content_changed_during_generation":false,"ai_tts_legacy_post":false,"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/28169","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\/2759"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=28169"}],"version-history":[{"count":1,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/28169\/revisions"}],"predecessor-version":[{"id":28175,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/28169\/revisions\/28175"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=28169"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=28169"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=28169"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=28169"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=28169"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=28169"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=28169"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}