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"When the facts change, I change my mind - what do you do, sir?"
-- John Maynard Keynes
Only a few days ago, in the month-end-edition of The Quotedian titled "New High Score" (click here), we highlighted how bearish the monthly charts looked on bonds. What a difference a few sessions make. In only four trading days, US 10-year treasury yields have dropped by 30bp from 4.60% to 4.30%, pushing bond prices higher. This can be well seen on the far right of the chart of the iShares 20+ years Treasury bond ETF, a popular instrument to make interest rate bets due to its "elevated beta" (aka longer duration), which has broken an important resistance of the short-term downtrend line (black dotted and black circle) and is about to take out a second resistance point, which used to be a support line (red dashed and red circle). Confirmation of the second by another drop in yields would strongly improve the short- and intermediate outlook for bonds. When the facts change …