September 18, 2018

Rate frustration coming to an end

The 10-year and 30-year are breaking down

Bonds are coming off another S-T pivot high – triple tops plus one. This peak, however, was set up like the two peaks preceded by low perceived risk. The decline thus far has not increased perceived risk based on the CBOE data, as bond volatility has remained oversold.

Three more reasons to be bearish on T-bonds.

1. A big top was established with the monthly head and shoulder’s top.

2. True North strategy on a short and intermediate basis is short the markets.

3. The volatility background sets up like previous I-T peaks is followed by nice declines.

Our volatility model – the Technical Event Model – on both S-T and I-T  provides a background that supports a high rate of change trend, given the above our bias is to use short selling strategies.

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