An overview of the bond market including treasury bonds, corporate bonds & municipal bonds via interest rates as well as various bond ETFs. Both technical & fundamental analysis of the bond market, as well as implications to the stock market along with the benefits of asset allocation & portfolio diversification, are also discussed. playback speed can be increased in the settings to reduce video duration
Back on April 6th in the post titled Muni Bombs, I had outlined the scenario in the first weekly chart of MUB (Municipal Bond ETF) posted below, stating that "A break below this uptrend line is likely to bring MUB (iShares S&P National Municipal Bond ETF) down to levels which will have wiped at least a year's worth of interest payments & quite possibly much more in the so-called "safe haven" trade of municipal bonds." So far that scenario has played out as predicted, with a very impulsive sell-off in municipal bonds since prices broke down below the uptrend [...]
This video covers the long-term outlook for the bond market as well as some of the near-term developments as well as the potential implications that they could have on the stock market. This video goes in-depth with an overview & discussion on the various type of fixed-income instruments, such as treasury bonds, municipal bonds as well as both investment grade & high-yield corporate bonds. While most of the video analysis posted on Right Side Of The Chart focuses on swing trading opportunities with time horizons typically measured in months, the take-away from this video is that the outlook & most likely [...]
In studying the charts this weekend, I noticed what appears to be an unusual alignment between the typical "risk-on" & "risk-off" asset classes. While the case for the next major leg down in US stocks that I have been making recently was considerably strengthened on Friday, I find it a bit unusual to see what appears to be a pretty solid technical case for a reversal (drop) in the traditional flight-to-safety assets & sectors such as U.S. Treasury bonds, utility stocks & consumer staples at the same time. Traditionally, those 'risk-off' securities have been the beneficiaries of market volatility as money [...]
As a follow-up to Friday's Bond Market Poised for Correction: Prices Down, Rates Up post, there are a couple of notable technical developments in the fixed income markets today, such as the backtest in JNK, a sharp drop in treasury prices following the divergent high & the breakdown below trendline support in municipal bonds.
The price of bonds is typically inversely correlated to interest rates (i.e. prices up=rates down & vice versa), with the one exception being high-yield, aka junk bonds, which tend to trade more in-line with equities as they are much more impacted by the economic cycle than fluctuations in rates. With that being said, it appears to me that all major classes of fixed income; treasuries, municipal bonds, investments grade corporates as well as high-yield (below investment grade) corporate bonds are all poised for a correction in the very near future as per the commentary on the charts below: I [...]
A break below this uptrend line is likely to bring MUB (iShares S&P National Municipal Bond ETF) down to levels which will have wiped at least a year's worth of interest payments & quite possibly much more in the so-called "safe haven" trade of municipal bonds. This weekly chart shows that the technical setup for a substantial drop in municipal bond prices in the coming months+ is already in place & close to a resolution as prices are starting to pinch towards the apex of this ascending triangle pattern, all we need now is a spark/catalyst to light this fire & [...]