U.S. Bond Market Week In Review: The Long-Term Charts Are Still Showing A Rally, Edition

by: Hale Stewart

This will be a short column. However, I believe it's important to note that the weekly charts of the treasury market ETFs remain in a long-term rally.

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The IEIs and IEFs have been in an uptrend since the end of 2013, making this a 2+ year rally.

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The TLHs rose in 2014, consolidated gains in 2015 and advanced to new highs in 2016.

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The TLTs rose in 2014, dropped and then consolidated in 2015, and once again rallied higher in 2016. They are currently a few points from making a 3-year high.

Why is this important? Treasuries are a safety play; they rise when investors are concerned about growth. They also rally when there is little to no concern about inflation - which is usually a natural consequence of growth. The continuing rally in this market indicates some investors would rather buy an asset yielding 2.5% than take on the increased risk of equities. That is a very big problem.

Hale Stewart, XE.com