Interest Rates–TLT

The then,June 14 and now charts as usual;

tlt july 14 2016TLT  nov 12 2016

The TLT represents 20 year government bonds. The move in the last four months is from 144 to 122, or 22 full points. That is the same as a move from 1.69% to 2.58%,or roughly a full percent. With this long a duration that is a lot of money if you are on the wrong side!

More importantly, these wedges or diagonal triangles in EW jargon normally retrace completely back to the base which would be around 90, or perhaps even 80 if the wedge is bigger than we expected. The RSI suggests a bounce here – back to the trendline? – and then we have  another 30 to 40 points to go.

A great ETF, TBT, also done by Barclays, is the 2X inverse Us Gov. Bond >25 years ETF. Here is a picture for the past year;

TBT  nov 11 2016

There are quite a few others, both leveraged or not and with a whole range of durations.  To me it is not clear that this move has much to do with the elections. But, on the other hand, I am not sympathetic to a number of Trump’s policies but there is one that I would wholeheartedly agree with and that is get rid of Yellen.