That was last seen in November 2022. When that happened, we saw a massive drop in yield and big move up on bond prices. Why was that day important? That was following a decent reading on the consumer price index, better than expected. But after falling sharply to 3.4% twice -- once in January, and once in February -- bond yields have done an about-face and moved up again.
This is because of the hotter inflation numbers, stronger economic data and a very hawkish tone from the Federal Reserve. We wonder if bond prices will ever stop going down, but in the end there is little to fight the inflation other than to rate hikes. Remember, bond investors loathe inflation as it erodes cash flows.
The chart shows a very strong trend and the formation of a bullish "W" pattern. We can see this playing out even more with yields rising to fill a gap at 4.3%. The last time yields were that high the stock market was making new lows around 3,600 on the S&P 500. That may be an area to probe again, for as the yield managed to make a double bottom, the S&P 500 never did the same.
Perhaps a test of that October low and bounce eventually would be the answer. For now, bonds remain under severe pressure.
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