Related Topics
Interest Rates , Investing

Treasury Bonds: How This Forecast is Playing Out

Here’s what happened with a shelf of support in the chart of the long bond

by Bob Stokes
Updated: May 23, 2023

The yield on U.S. Treasury bonds trended higher from 1942 to 1981 -- that's 39 years.

Interestingly, yields (or interest rates) then trended lower for 39 years (1981 to 2020).

Thirty-nine years is quite a long time -- well long enough for observers to get used to the idea of exceptionally low yields, even the Fed.

Indeed, here's a Sept. 16, 2020 headline from the Wall Street Journal:

Fed Signals Low Rates Likely to Last Several Years

Elliott Wave International President Robert Prechter had an entirely different perspective. Here's what he said just a week later in his Sept. 23, 2020 issue of The Elliott Wave Theorist:

On September 16, Fed Chairman Powell [said] he expected short term interest rates to stay near zero as long as inflation stays below 2%, a condition he believes will maintain... through "the end of 2023." I think there is not a chance in the world of that scenario playing out.... The probability is high that interest rates have begun a process of rising... [emphasis added]

As we all know, interest rates or yields have risen substantially since 2020.

This chart and commentary from the May 19, 2023 Elliott Wave Theorist provide an update (keep in mind that Elliott wave labeling is available to subscribers):


Treasury bond futures have been slipping again. As you can see in [the chart], bond prices broke a shelf of support this week and traded today at their lowest level in ten weeks. A debt crisis is brewing, and higher long term interest rates will add to the pressure.

Yes, servicing public and private debt is getting a lot more expensive. And that debt has been increasing dramatically and rapidly (CNBC, May 18):

The global debt pile grew by $8.3 trillion in the first quarter to a near-record high of $305 trillion... .

If indeed a "debt crisis is brewing," and interest rates are headed even higher, will you reallocate your portfolio?

Put Elliott Wave International's analysis on your side by getting insights into stocks, bonds, and that "proverbial" king -- cash.

Just follow the link below.

NASDAQ’s Price Action: A Blast from the Past

The May 19 Elliott Wave Theorist delves into what is described as a “NASDAQ Blowoff” and mentions that we’ve seen a similar development before.

The Theorist goes into detail about this historical comparison.

Likewise, our U.S. Short Term Update (thrice weekly near-term analysis of major U.S. financial markets) provided related analysis in the May 19 issue by showing two S&P 500 indexes in a chart titled:

The Generals Charge, The Troops Say You Are On Your Own

Both the Elliott Wave Theorist and U.S. Short Term Update are part of our flagship Financial Forecast Service.

Check out our independent analysis of major financial markets by following the link below.

Lockheed's (LMT) "Waterfall Decline" from Record Highs Fits Elliott Wave "Form" to a T

On April 18, aerospace/military defense giant and Big Board listee Lockheed Martin (LMT) soared to its highest level in its 28-year history. Where "fundamental" analysis was shapeless, Elliott wave analysis saw the stock's current form, and its price future.


Forget the Fed -- Watch the Waves

The Federal Reserve, and to a lesser degree the European Central Bank, have dominated the conversation about interest rates lately. But watch our Interest Rates Pro Service analyst Ivo Zhelev apply textbook Elliott waves to forecast the price of the UK's Long Gilt -- and, by extension, UK interest rates -- without a single glance at central bank statements.

Why a U.S. Recession May Foil Economists’ Expectations

A recent survey reveals positive expectations for the economy by a group of "professional forecasters." Learn why you may not want to bet the farm on that expectation. This chart compares leading economic indicators around the time of past recessions with what's going on now.