Monday, September 22, 2008

Bond Prices

quite a pull-back in bond prices at the end of last week. does my outlook from earlier last week, when I wrote, 'this looks like a good time for the market to consolidate before a push to record levels for every maturity' carry any validity now?

purely from a price perspective, I don't see much of a shattering change to the program. for the most part prices have retraced around half of the bull move that began in June. so far, none of the maturities have violated the important moving averages or prevailing trendlines. so far we've seen two impulse waves and two correctives. so another up-move before too long would fulfill the sequence quite nicely.

the bearish interpretation would be that we just completed a high A-B-C of an ongoing bear cycle that began early in the year. if so then get braced for a down move consisting of five waves and a lot of pissed-off geldpolitikers.

so far the events and price action have played along with my Bond Bubble scenario, so that's what I'm sticking with. but can the market absorb the massive new issuances soon to come from the Treasury? reasonable concern, but I'd venture to say yes -- so long as a schism between Treasury and Company Store doesn't surface.

below are the charts of the different maturities. draw your own conclusions.

2 Year Note:

5 Year Note:

10 Year Note:

30 Year Bond:

UPDATE 3:30 AM: for a broader perspective, here is a weekly equivolume chart of TLT, the long bond ETF: