TYX 30-Year US Treasury Yield Monthly Chart; Long-Term Bottom in Yields Continues; Positive Divergence Developing

The 30-plus year note and bond rally is remarkable (higher bond prices lower yields). A Gary Shilling was the only one that called the bond rally. He was laughed at and ridiculed about the call the first few years. About 15 years into the bond rally and folks were not laughing anymore; instead, they were asking Shilling for guidance. Keystone proclaimed last Fall that the end of the three-decade-plus bond rally would occur over the coming months. In September/October 2019, the Fed stepped in with enormous support to prevent a stealth market collapse that few are aware of to this day. Markets have been erratic ever since.

Yields take the big dip lower. During March, the 30-year yield was down to a 0.8% handle now sitting at 1.45% as a new week of trading is underway. The activity sinks the chart indicators slightly but overall the same scenario is in play. The falling green wedge pattern is bullish (for this chart it means lower prices higher yield should occur going forward). Ditto the oversold RSI and stochastics and the positive divergence with the stoch's. These factors create the bounce in yields over the last couple months. The stoch's have even placed a higher high hinting that the yields will continue higher on the monthly basis.

The red lines show weak and bleak indicators as yield prints a matching or lower low. The yield is in the same ballpark March-May so you can be generous and say that the RSI and ROC had displayed a smidgeon of possie d to help bounce yields. However, the MACD line remains weak and bleak. There may be one or two jog moves needed to set the TYX up for the long-term up move in yields. Interestingly, however, the up in yields is likely coming far faster than anyone realizes.

It is funny. Keystone has been writing about disinflation and deflation the last few years and he was scoffed at by many but as of a couple years ago everyone is now in the non-inflation camp even Fed members. The shoeshine boy said that yields will not move higher for several years. Years back, many said inflation is around the corner. It was not. Now all those folks have capitulated so you know what will happen next. Yes, the long-term bottom in yields will occur and yields will begin to move higher over time confounding the television talking heads again. The markets like to make fools of the maximum amount of people at any point in time.

Yields will come back down again to matching lows to allow time for the MACD to go possie d and that will be the bottom in yields probably for many years forward. Maybe yields go up for 30 years now? So TYX would be expected to sink again, probably in sync with stocks dropping like rocks, and perhaps the negative rates will be tested on the short durations, but the bottom is in once the MACD goes possie d. The German 30-year yield slips negative a couple hours ago. 

The pink arrows show the tight standard deviation lines that squeeze out big moves. The tight bands only predict a big move but not direction. In 2013 the move was up in yields. In 2018, a couple month fake-out occurred just enough to get everyone proclaiming that yields were about to explode higher with inflation, but then these folks had their faces ripped off. Yields started to drop like stones all the way into the spring bottom.

The TYX would be expected to move lower for a month or two, then that will be the bottom in yields (one jog move), or, TYX will come down for a month, back up for month or so, then down for a month or so again for the bottom, then up and away (two jog moves). Thus, the long-term bottom in yields would be expected to occur during July-November with the August-September period most likely. The bottom is in when the MACD positively diverges. This hints that global investors and traders may lose faith and confidence in the Federal Reserve and the other corrupt global central bankers this year. That will be a sight.

The TBT ETF mimics the 30-year yield chart above and is a buy on the long-term basis (for many months ahead not short-term). Conversely, TLT, that moves inverse to TBT, would be a short going forward on the long-term basis. Drilling down to take a more near-term look, TBT has a bit more upside juice on the weekly chart and TLT has a bit more downside juice (MACD is weak and bleak). Daily charts are sideways sputter. Simply do not play either ETF now due to the choppy action but keep an eye on these plays. Give it a month or two and TBT will likely be a long trade then and going forward for many months (and TLT will be a short). It is not worth it to chase TLT higher now.  The shorter term actions looks like a lot of garbage you have to deal with so there are far better trades out there. If you are in TLT now and made money, you probably want to scale out on the rallies going forward. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.