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The principal driver behind soaring equity prices the past six weeks has been the counter-trend rally in bonds. This week, it looks like bonds may have peaked under a key resistance level. Specifically, there was a price gap on the TLT at 96.66 which was approached but not pierced, and TLT starting to weaken afterwards (in spite of equities still soaring).
Probably the most compelling chart I’ve seen for the argument that rates have peaked and are heading much lower.
Over the past five weeks, the normally boring bond fund TLT has ripped 17% higher, and it has pushed over its medium-term descending trendline today. Bond bulls have been on fire lately, and all the chatter is about multiple interest cuts in 2024 (which, let’s face it, isn’t because the economy is going to be going great, but will be a bid to stoke the coals).
Bonds continue to be exceptionally strong, and while I thought they’d stop at their price gap, they smashed through it like something which smashes through things. I’d suggest the next two tests for TLT would be the descending trendline I’ve drawn and, next, the horizontal.
