T-Bonds Stall at Resistance – All Star Charts –

From the Desk of Ian Culley @IanCulley

US treasuries finished 2023 with a bang, hitting our initial targets before Christmas.

But the long-bond trade is losing its luster.

Resistance is now coming into play as the bond market catches its breath…

Check out the US Treasury Bond ETF $TLT with a 200-day simple moving average:

I’m not a big fan of moving averages. I don’t like how they distract from price and create extra noise on the charts.

Regardless, many market participants track the long-term moving average. Bond bulls are shouting their battle cries as TLT peaks its head back above the 200-day mark.  

So, is it time to get long bonds?


The 200-day moving average is still sloping downward when we take a step back with a weekly chart:

US T-bonds remain in a structural downtrend. Plus, momentum holds within a bearish regime.

Now is not the time to buy bonds.

Mean reversion traders are licking their chops at these levels (price is hitting resistance as the 14-day RSI prints its highest reading in almost two years) as they flip their books short bonds.

I’ll pass on this one. It doesn’t fit my personality. The bond market will likely chop sideways during 2024 – not my cup of tea. (I prefer a pu-erh or a delicate sencha.)

I wouldn’t argue if you shorted TLT against last month’s pivot high – or if you took a long position on a decisive close above 100.

Both make sense, as two things can be true.

Nevertheless, last season’s tactical bounce in bonds has run its course.

Now it’s time to practice patience and remember no position is a position.

Stay tuned.

Countdown to FOMC

The market is pricing in a pause in the hiking cycle until March 2024 and two cuts before next summer.

Here are the target rate probabilities based on fed funds futures:

Click the table to enlarge the view.

This data is from the CME FedWatch Tool as of January 4, 2024.

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