Bonds have been in a bull market for decades, and it has been a costly idea to bet against them. Is the bond bull market about to end?
An important support test is at hand that will go a long way in answering this important question.
This chart looks at the yield on the 10-year note inverted, on a monthly basis. By inverting yields, this chart now resembles the price of bonds.
Over the past 30 years, inverted yields have created a series of higher lows and higher highs. While testing 25-year resistance in March, yields created “the” largest reversal pattern in decades at (1).
Since hitting the resistance line at (1), inverted yields have tried for months to climb above this line, with no success.
Recent weakness has inverted yields testing multi-month support at (2).
Is the multi-decades bull market in bonds over? Yields are testing strong support at (2). If this support fails to hold inverted yields, odds increase that bond prices have peaked and interest rates in the intermediate term are going to rise.