The Bond Market Is At An Absolutely Critical Crossroads

From Gary Savage: Bonds are severely oversold right now. There should be a bounce soon, but if it’s weak, or doesn’t last very long, then investors should prepare for an outright crash.

I’ve never seen a bubble yet that popped gracefully. Take a look at the long-term weekly chart for 30-year Treasury Bond Index to see the carnage in the bond markets over the last couple of months.

bonds

After seven long years of global quantitative easing (QE), does anyone really think there won’t be consequences? If we don’t see a major bounce soon, things could get very ugly.

The iShares Barclays 20+ Yr Treas.Bond (ETF) (NASDAQ:TLT) fell $0.51 (-0.43%) in premarket trading Tuesday. Year-to-date, the largest ETF tied to long-term U.S. government bonds has fallen -1.74%, versus a 10.71% rise in the benchmark S&P 500 index during the same period.

TLT currently has an ETF Daily News SMART Grade of D (Sell), and is ranked #20 of 27 ETFs in the Government Bonds ETFs category.

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