What's Next For The Bond Market

Back on June 14th, I posted the above chart and said that the bonds should put in a bottom based on the relationship between the dollar and interest rates. As you can see in the chart above, June 14th was the bottom in the bond market and we have been moving higher since then.

If we take a look at the chart now, Bonds should continue to rally going into early August where they are expected to put in a high and then sell off. On a seasonal basis bonds due tend to rally after July going into late fall, but I'm going to put more weight on what the above chart is telling me and I will look for the bond market to trend lower after early August.

Keep in mind these intermarket relationships can and do fall apart that is why it is important to use other technical tools to confirm what the above chart is forecasting. For example when early August comes, if the bond market triggers a bearish moving average crossover signal to short, I would take that signal because it coincides with what the above intermarket relationship is forecasting...As always, we'll see what happens.