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Bond Players Don’t Think Fed Will Taper Any Time Soon

Published 07/21/2014, 11:55 AM
Updated 07/09/2023, 06:31 AM

The 20-Year Treasury

Coming into 2014, yields had just experienced the largest 18-month rally in 30 years. On January 24, the Power of the Pattern said their was a two-thirds chance bond prices would rally and yields would fall. (see post here)  

Did the rally in yields get overdone over the past year and a half? We believed so at the first of this year, which caused members to be long iShares Barclays 20+ Year Treasury (ARCA:TLT) for months.

The above chart highlights that TLT is reflecting relative strength compared to the S&P 500 this year and could be breaking above a 2-year falling resistance line above. 

It appears that many people at the first of this year thought the Fed would start a taper program, pushing rates higher. What's happened instead? Rates have fallen and TLT could be breaking out.  What might happen to TLT if the S&P 500 breaks steep support dating back a few years?

Will that impact Janet's plans?

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