talking technicals
GARTH MACKENZIE: Good times may be done
Experts suggest the decades-long bull market for US bonds may be over
A particularly closely watched chart this year will be that of the yield on the US 10-year treasury bond. The US bond market has been a bull market since the early 1980s, but experts are increasingly suggesting that the best days for bonds are over and higher bond yields can be expected in future. Bond prices move inversely to bond yields. The chart shows that the yield on US 10-year treasuries has fallen consistently for 35 years. This implies that bond prices have risen consistently in that time. But there are fundamental reasons for bond yields to move higher. Factors such as a strong US economy and low unemployment will likely drive inflation higher. In addition, the era of US quantitative easing is over and an era of quantitative tightening has begun. For example, the US Federal Reserve is no longer buying back bonds in the open market to stimulate the economy. Instead, it is looking to start selling bonds in a process of normalisation. This will increase bond supply in the mar...
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