Bond Rally

Of a Lifetime

Finished?

DYI:  Did interest rates bottom out back in July 8, 2016 at 1.37%??  Technicians – those who study chart patterns – would say that due to the classic double bottom of 2012 at 1.4% and then repeated 2016 at 1.37% would signify a secular end of the greatest bond rally of a lifetime.  My suspicion due to the huge corporate indebtedness there is one more last hurrah for the bond bulls.  A deflationary smash as corporate credit defaults driving down high quality Treasury yields would be very much in store.

 

How low?? 

I would not be surprised if bills and notes at 5 years or less go negative and with 10 year T-bonds less than 1% and the grand daddy 30 year T-bond in the low 1% range.  This could very easily persist for a few years even with the Federal Reserve printing at a monstrous pace but to no avail as corporations and citizens having visceral reaction to any additional debt accumulation.  Hence the expression pushing on a string all to no avail in their attempt to “jump start” the economy; only when enough debt is either defaulted or paid off to low enough levels will debt accumulation renew.

DYI