Bond Breakout

Us Treasury Bonds have been the subject of some debate ever since the Fed announced the end of their bond buying programs. Rates had to go up, they said. But they have not. Then the Fed started to run off their balance sheet. Another round of calls for higher rates. And again nothing.

When the Fed embarked on a tightening program surely rates would have to go up, right? They have raised rates 8 times now and long term Bond rates still have not gone up materially. In fact, what is happening right now is that Bond prices are near 52 week highs and rising.

The chart above shows the price action in the US treasury Bond ETF over the last 2 years. Following a low in the beginning of November prices have been rising (rates falling). Thursday the price broke above what had been long term resistance. it may be a stretch to commit that Bond Prices have moved out of consolidation and back into a long term uptrend. But they certainly are not trending lower.

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