the Bond bull market…soon to be bear market

Since October 1981 Bonds have been in a Supercycle bull market. Within one year after Ronald Reagan was elected the 40th President of the USA 30-year Bond yields peaked at 14.59%. Ever since then, and we’re covering nearly twenty-eight years, Bond yields have been generally declining. Recently the 30-year Bond traded as low as 2.52%, and the 10-year Bond, which is the most widely followed these days, traded as low as 2.04%. If this were a Supercycle bull market in stocks it would have been a lot easier to follow, as bull markets in equities rise in impulse waves. Bond prices, however, are impacted by periodic auctions and there was a shift in the beginning of this decade from the 30-year to the 10-year. As the 30-year Bond was phased out during the Clinton presidency. Then it was phased back in again during the Bush debt driven presidency.

If one were to review a Bond chart of the past thirty years. It would certainly be quite difficult to identify a clear-cut EW pattern from what has unfolded. OEW, however, does quantify every single significant wave in every market, and Bonds are no exception. The OEW pattern we have identified is as follows. The nearly thirty year bear market in rates, from over 14% to just above 2% has taken the form of a double zigzag. The first zigzag completed in 1993 at 5.78%. This was followed by an X wave into the 1994 high of 8.21% yield. Since that high in 1994 Bond yields have been unfolding in the second zigzag. The broader waves are as follows:

Primary A 1986

Primary B 1988

Primary C 1993

Primary X 1994

Primary A 1998

Primary B 2000

Primary C currently underway

Each Primary wave has divided into three Major waves. This last wave Primary C is no exception:

Major A 2003

Major B 2007

Major C currently underway

Each Major wave has subdivided into a double zigzag all of its own. Now one can see why counting this market is quite difficult. Major wave C completed its first zigzag in March 2008. Then rallied into June 2008 ending the X wave. Since then the second zigzag has been underway. Wave A of this last zigzag bottomed in Dec 2008, and wave B appears to have completed at the recent high in Feb 2009. This suggests that wave C of the last zigzag, of this twenty-eight year bear market in yields, will soon be underway. When this final set of waves concludes later this year, rates should bottom and a new bull market in Rates/bear market in Bonds should begin. You can find several charts illustrating this long term count on pages 9 and 10 of the following link:


About tony caldaro

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5 Responses to the Bond bull market…soon to be bear market

  1. hawk says:

    Tony, I3, thanks will check it out.


  2. tony says:

    Hi Hawk,It\’s OEW, I just do my best to interpret it.


  3. Impulsive says:

    hawk, the only one I know is TBT, but double check…..


  4. hawk says:

    Tony, your EW analysis is outstanding. Thank you.Is there an ETF out there that shorts the bond market? Thank you again.


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