US Long Bond Bubble:

Let us pass on the Dominant Theme investing observations this week and take a quick look at the current sell-everything and buy US T-bonds movement. Many long bond bulls are basically berma-bears who believe that anyone who owns anything else such as a house, stocks, collectables and even gold are dummies

Our chart is about 30-years of monthly closes of the 10-year US T-bond yield. Remember the bond price and the yield are inverse – so a long 30-yr downtrend in yields translates into a long 30-uptrend in the US 10-yr T-Bond. This long advance in the 10-yr T-Bond was a secular advance or secular bull with this one having 5-shorter bull and bear cycles (see the secular cycle count on the chart). I have also placed a simple Elliott Wave count 1-2-3-4-5 with wave three (2 to 3) subdividing into a (1), (2), (3), (4) and (5) wave count. So who is correct the bond bulls or bears? The acid test is the price – the bond bulls need a new low on the yield (under 2% ) and the bond bears need a move above 4% to confirm a long term sell-of-a-generation on bonds