5 Ways Of Looking At A Bond Market Sell-Off

Bonds peaked in price during the March/April, 2020 pandemic scare and they are continuing to sell-off 2 years later. Financial advisors who recommend a classic 60% stocks/40% bonds portfolio are having fun explaining it to their clients. You mean both bonds and stocks can go down at the same time? Oh yeah.

Here’s the monthly price chart for the iShares 20+ Year Treasury Bond ETF, a widely-followed benchmark for the market:

All those who fled to the “safety” of Treasuries from early 2020 to recently are losing money. Note the large red bar of selling volume last month, seen below the price chart. Note how the late 2019 support level of 130 is no longer support. Sellers overcame buyers there. Note that the next serious level of support is way down there at about 105.

The weekly bond benchmark price chart is here:

You can clearly see the downward movement from the early 2020 price burst on huge volume. Bonds seemed to have bottomed by March, 2021, but then returning to sell mode by November of that year. It’s been straight down since that time. Take a look at how that previous support from early 2021 has been taken out convincingly over the last 3 weeks.

This is the iShares 20+ Year Treasury Bond ETF daily price chart:

That red dotted line demonstrates the seriousness of the descent from December to now. This benchmark bond ETF traded then at just above 154 and by mid-April, it’s down to 125.12. Note that dip buyers come in now and then but that sellers are coming in more often and in greater numbers.

For a different perspective, here’s the old-school point-and-figure chart for the iShares 20+ Year Treasury Bond ETF:

That it’s broken below the up trending blue line that characterized price movement since 2014 is not a good sign. In the upper left hand corner of the chart, note the “P&F Pattern: Double Bottom Breakdown on 10 March 2022.” It’s not necessary to spend a lot of time examining this one: it’s pretty clear what the direction is now.

Here’s the point and figure chart for the 10-Year Treasury yield:

This chart shows basis points: the yield has gone from .40% at the beginning of 2020 up to 2.71% last week. It’s the upside down version of the bond benchmark. The upper left hand corner description is instructive: “P&F Pattern: Double Top Breakout, 09 March 2022.” A break above the previous 2018 high of 3.20% would certainly get some attention.

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Not investment advice. For educational purposes only.