CNBC International (Trading Nation)
The US bond market is getting slaughtered as the U.S. 10-year yield hits its highest level since July 2011. The move has founder Todd Gordon predicting that a key technical pattern is about to be broken.
Looking at a chart of the TLT long-dated treasury ETF, Gordon told CNBC’s “Trading Nation” that recent weakness has the chart on the brink on piercing through the bottom of a head-and-shoulders pattern.
Gordon is specifically talking about a parallel channel that has been taking place for ten years. A head-and-shoulders pattern has appeared that suggests the 20+ Year Treasury ETF (TLT) could be moving toward the bottom end of the channel, as TLT failed to retest and recapture old highs.
TLT has specifically bounced up time and again from the $115 level before falling back, and now Gordon believes TLT could finally fall below that support level. This would essentially put an end to a four-decade downtrend in rates and uptrend in bond prices, according to Gordon.
Bottom line: Gordon believes the head-and-shoulders pattern in TLT is a bearish signal that could send bonds plummeting and rates soaring.
TRW Stockbrokers Commentary:
The S-H-S (head & shoulders) pattern is also visible on the NGSEO&G index (what we call the Quasi Bond Market Index).
Thus, confirming that Nigeria is no longer a standalone country in the global debts markets but an essential part of the ‘frontier markets’ debt puzzle. We think that what is about to happen in the global debts markets will turn upside down our basic knowledge of fixed income securities…. are they safe haven in the next secular global financial crisis???