The 08/07/22 blog “The Interest Rate Bull Market” examined the long-term evidence that interest rates were now in a bull market. This blog focuses on the intermediate – term view and additional bullish evidence.
The weekly 30-Year Treasury Bond Yield (TYX) chart courtesy of Trading View illustrates the bull move since March 2020.
The recent TYX decline from the June 2022 high was an almost exact Fibonacci .236 retracement of the bull move since March 2020. The exact level is 2.851, the actual bottom was at 2.855.
Note the subsequent Stochastic Bullish lines crossover.
Note to Elliotticians, the interest rate market is probably the hardest to apply Elliott waves. The reason – unlike most other markets interests rates cannot rise indefinitely. The Elliott wave count illustrated is only one of several alternate wave counts. The key point is that since March of 2020 the rallies have been steep and smooth. The declines have been shallow and choppy. Those are the characteristics of a market in a rising trend.
A move below the recent bottom at 2.855 could open the door for more downside action, perhaps to a .382 retracement of the 2020 to 2022 bull move.
Absent a move below 2.855 there is a high probability that interest rates could continue to climb throughout 2022.
2 thoughts on “The Interest Rate Bull Market – Part Two”
It’s interesting how the bond market is anticipating a recession. Recent inflation data reinforces the logic behind the recent bond market swing. I suppose that the bond market is looking forward 6 months. If the bets on lower interest rates sync with a recession that appears in early 2022, one would think that interest rates could remain relatively low for several months. I agree with you that it is just a matter of time, however, before interest rates start to climb again.
Thanks for your imput.