It’s entirely possible that the never ending rally in long term treasuries is coming to an end. Yeah, I said it. Years down the line, we might look back on last week and notice that as the first meaningful higher low in long term rates before the top.
Here’s a look at 10 year US Treasuries since the winter low. Since the low we’ve only seen gradual new highs slow grinding moves higher. Compare that to last falls drop on the far left.
This is a huge potential momentum shift. Where I come from, an aggressive move followed by a gradual move in the opposite direction is usually followed by an aggressive move in the other direction (in this case down)
Here’s a similar look in the 30 year Treasuries. It has just been a very weak rally.
Moving on to the charts of rates, we see catapults back above the summer lows.
We also see financials with a false head and shoulders top breakdown last week.
So we have an underlying structure that is bearish long term treasuries and bullish rates. Combine that with this week’s catapult and financial stocks confirming and all the elements are there for an intermediate term trading opportunity.
Full Disclosure: I’m long the ultra short long term treasury ETF TMV.
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