Bonds Could Have More of an Upside

Barring some rather abrupt reversal in the current trend in trade, tariffs, tariffs and even higher tariffs, bonds could have even more upside in their near-term futures.


By Jeffrey Hirsch

Back in the beginning of April we noted the 30-year treasury bond (NYSEARCA:TLT)had a seasonal tendency to dip in April and early May (around the time stocks like to make a seasonal high) before moving higher from sometime in May through the end of August. Thus far this year this trade has been a perfect textbook setup.

In the following chart weekly bars of the 30-year Treasury bond future appear on top with their seasonal trend since August 26, 1977. The 30-year Treasury bond did dip in April and as trade war concerns grew in May, as stocks slipped, bonds ripped higher. The recent rise has been brisk but considering the retreat in tech stocks further gains are not out of the question.