Bonds Take Out Key Support

Bonds continue to crash. The setup was there for a potential low and it triggered and failed. Support that was broken today was pretty critical. Next support on the 30-year US Treasury (ZB H1-D) is now 117’22 and 117’01. You can see that the 121 level held for a few days, but it proved to only be a pause on the way lower.



Here is a longer term chart of the 30-year Treasury ($USB). You can see that it has reversed the breakout above 124 from last summer. Next support is in the 117 but a test of low of the trading range (near 114) seems very probably.



The selloff in bonds has not been limited to Treasuries. You can see that National Municipal Bonds (MUB) are in a full blow crash, as are California Municipal Bonds (MUC). This should be no surprise, as I have been writing about the crash in these bonds for several months now.



The flip side of the bond market crash is that by definition, Interest Rates are exploding higher! Shorter-term rates on US Treasuries have doubled in about a month. They still have a ways to go to get back to the highs of the year, but the yields are already much more compelling.



Long-term Treasury Yields have all gone up over 1% in the last month or two. A crash in the 30-year Treasury to this year’s low would drive the 30-year Treasury Yield into the 4.8% range.



Bond prices can reverse up at any time, but the next high probability setup would be at or about the 117 price level next week.