econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 10 December 2016

Violent Bond Selloff: An Eye-Opening Perspective

from Elliott Wave International

In Elliott wave terms, bond investors have transitioned from extreme optimism to extreme pessimism.

*********

What a rout in the bond market in November (Bloomberg, Dec. 1):

Global Bonds Suffer Worst Monthly Meltdown as $1.7 Trillion Lost

The price of U.S. Treasuries nosedived as 10-year yields -- a.k.a., interest rates, which move inversely to bond prices -- saw their steepest climb since November 2009.

Bloomberg (Dec. 1) provides another perspective:

The 30-year-old bull market in bonds looks to be ending with a bang. The Bloomberg Barclays Global Aggregate Total Return Index lost 4 percent in November, the deepest slump since the gauge's inception in 1990. Treasuries extended declines Dec. 1.

Elliott Wave International subscribers were prepared well ahead of time.

On June 17, well before the rout, The Elliott Wave Theorist showed this chart and said:

The 30-year Treasury bond made a new all-time high on June 16. The triangle is indicative of a fourth wave, making the recent thrust a fifth wave.

This wave count is terminal. Bonds are on their last leg.

But, at the time, most speculators disagreed. Even so, bond prices topped less than a month later. Said our U.S. Short Term Update on July 25:

The wave structure of the rally ended at the 177^11.0 high on July 11. Sentiment remains historically optimistic. The most recent tally of the Commitment of Traders data shows that Large Speculators (trend-followers) remains a tad off a 21-year record net long extreme in the percentage (of open interest) of bond futures and options contracts they hold. With Commercials taking the opposite side of this trade, the sentiment set up is in place for a continued bond price decline .

Despite the historic optimism, Treasury bond prices continued to decline.

This week, as of Dec. 1, the 30-year yield rose to as high as 3.15%. That's a 51% climb since the July low of 2.085%.

In other words, in the short term, the market sentiment in bonds has transitioned from a highly elevated optimism four months ago to a deep pessimism we see this week. In fact, the 30-day bond Daily Sentiment Index (trade-futures.com), which our U.S. Short Term Update quotes quite often, is at its lowest level since September 2013 – a contrarian indicator.

Investor psychology could grow even more negative toward bonds. But, keep in mind that countertrend moves in financial markets usually occur when sentiment reaches an extreme like the one we’re seeing now.

Put differently, the 30-year Treasury bond's price pattern is again looking highly interesting -- although, again, in the opposite way most investors expect.


Unleash the power of the Wave Principle

Much like a great sports play; to appreciate a great market forecast, you have to see it. In fact, we'd like to show you four. Our examples do indeed show what can happen when Elliott analysis meets opportunity. But we're not asking you to attend a class in 'good calls.' In each of these four markets, the unfolding trends have (once again) reached critical junctures. You really, really want to see what we see, right now.

Get your report -- How to Find Real Opportunities in the Markets You Trade -- FREE

This article was syndicated by Elliott Wave International and was originally published under the headline Violent Bond Selloff: An Eye-Opening Perspective.

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.




Econintersect Contributors


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Slow Economic Growth Will Be Around For A Long Time
The Job Guarantee, Wage-Price Inflation And Alternative Solutions: Part 2
News Blog
NASA's Plan To Use A Giant Magnet To Make Mars Habitable
Mexico Faces Cloudy 2017 Outlook, Recent Data Mixed
Money Market Funds And The New SEC Regulation
Life Cycle Hypothesis
How Tight Is The U.S. Labor Market?
Infographic Of The Day: President Trump's Budget Would Make Big Cuts To Agencies Which Focus On Science
Early Headlines: GW Will Increase Rainfall, New Ohio Law Inhibits Wind Farms, Break Up California?, EU C Emissions At 22-Yr Low, Mosul Offensive Suspended, And More
The Cynical Game
Earnings And Economic Reports: Week Starting 06 June 201627 March 2017
Harvard Raised Over One Billion Dollars In Donations In 2016
Lack Of 'Dark Matter' In Early Galaxies Perplexes Astronomers
The Global Cost Of Tax Avoidance
What We Read Today 25 March 2017
Investing Blog
The Week Ahead: Does The Demise Of The Health Care Bill Mean Anything For Stocks?
Buy This Red-Hot Trend As U.S. Stocks Stall
Opinion Blog
Fade To Black
Robots, Aliens, Corporate Drones - Who Will Be The Citizens Of The Future?
Precious Metals Blog
These Gold Stocks Will Produce Much Bigger Gains Than Gold Itself
Live Markets
24Mar2017 Market Close: Trumpcare Collapses But Little Affect On The Markets
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government































 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved