Source: Larry Tentarelli, CEO and Published, Blue Chip Daily Trend Report
iShares 20+ Year Treasury Bond ETF (TLT) traded its highest weekly volume on record last week, since inception in 2002. (TLT) closed +4.22% on the week.
Based on 5 key factors below, we believe that this is a strong sign that a major cycle low could be in for US Treasury bonds.
1. The US Treasury announced at their Quarterly Refunding Auction (QRA) on Wednesday that they may be near the end of their capital raising cycle.
2. The jobs market is starting to soften.
3. The FOMC is likely at or near the end of their rate hiking cycle.
4. Inflation, while elevated, is trending lower.
5. Many bond yields and the US Dollar index closed below the 50-dma. 10 and 30-year bond yields gapped lower after this week’s Treasury QRA.
From a technical perspective, (TLT) may have seen a capitulation low and reversal over the last 3 weeks. Last week (TLT) undercut multi-year lows, but reversed higher for the week, on heavy volume. We initiated a new long position last week, with a stop loss at 79.40. Risks to our view and positioning would be a sharp reversal or breakout in bond yields. Tentarelli has been bearish on bonds for most of 2023 and initiaed a long position last week.