The above chart is a 2 year daily chart of the 30 year bond (gold bars) and in red is the U.S. Dollar which is offset 35 trading days into the future.
What I am trying to show in the above chart is that the U.S. Dollar has been leading the bond market by about 35 trading days.
As you can see the correlation between the two markets has been very accurate in terms of direction and turning points. Each of these turns in the bond market could have been anticipated 35 days in advance just by look at what the dollar is doing.
If you look at what this chat is telling us now, you will see the dollar (red line) is moving higher which means the bond market should move higher as well. If this relationship continues to hold up, bonds can be expected to rally at least into August.
Above is a 12 year monthly chart of the 30 year bond. I've noticed that the bond market tends to rally around July going into December. In fact, this has happened 10 of the last 12 years. I placed blue arrows every time the bond market rallied after June/July.. The two red arrows are the two times that the bond market did not rally during this time of year.
Based on the above two charts, I think we will begin to see the bond market stabilize for a few months and maybe even rally a bit going into the fall.
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