Bonds and Rates Summary

• Short-term, Bonds are likely to rally in June for the 8 week cycle high before making a PI/PEI 13 month cycle low in late July.
• Bonds have been declining since the PI/PEI 13 month cycle high of January 08 and are Neutral since Nov. 30, 07
• Bonds are headed for a major 60 year cycle high near 2010 and will be very volatile as major forces pull them both ways.
• The large rate cuts from the Fed confirms the 6 year cycle high and suggests short rates will stay low into 2010.

Short-term we are due for a bounce

Bonds are oversold and approaching the 8 week cycle low, but could drop to lower support levels before a low is in place and we get another multi-week rally in June, before the 13 month cycle low in late July.

Charts courtesy of StockCharts.com

Charts courtesy of StockCharts.com

Bonds are headed for a Summer low

Bonds are likely to make a low in late July and rally possibly for the last time into early 2009, thus ending the 30 year Bull market that started in 1980.

Charts courtesy of StockCharts.com

Charts courtesy of StockCharts.com

The 30 Year Bonds are approaching their 60 year cycle high

The 30 year Bond broke below a 20 year uptrend line three times in the last 2 years and recovered twice so far, suggesting the next cycle high in 2009 will be the final top of the 30 year bull market from 1980 to 2010.

Charts courtesy of StockCharts.com

Charts courtesy of StockCharts.com

Fed cut confirms the 6 year cycle high in Rates

The 6 year cycle high in Rates started with a pause in August 2006 and was confirmed by the aggressive Rate cut from Bernanke in August 07 and January 08. The spread of the credit problems will leave the Fed no choice but to keep short rates low into the next 4 year business cycle low into 2010 and keep the Bond Bull market going.

Charts courtesy of StockCharts.com

Charts courtesy of StockCharts.com

The Yield curve suggests that short Rates will stay low

The Yield curve decisively turned down for the 6 year cycle high, and suggests the Fed will have to keep short rates low despite rampant inflation into the next cycle low in 2010.

Charts courtesy of StockCharts.com

Charts courtesy of StockCharts.com