Looking at 10 and 30-Year Treasury Bonds for Clues on What's to Come

Ilan Levy-Mayer  |

Back in April I wrote this piece:

Wondering if bonds hit double top, well hindsight is 20/20 and it seems I was definitely right about this one. The question now is where is this volatile market heading next?

Before I jump in to take a look at the charts, one quick side note: Bonds have been one of my favorite day trading markets these past six months...so if you are looking for a different market to add to your day trading mix, I recommend observing the 30-year bonds.

My assumption as of late is that by now the bonds have already discounted 1-2 rate hikes by the end of the year, hence the big drop we noticed in the last few months. My speculation is that the Fed will raise 0.25 at best by year's end.

US bonds have an inverse relationship to interest rates, and as we all know, interest rates are at historic lows, meaning US bonds are at historic highs. More about the mechanics of this futures contract are available here.

I took a look at the 30 yr - 10 yr spread to get a feel between the 10-year rates and 30-year rates to see if there would be any clues in that chart. The chart is below for your review:

US Bonds- Ten-Year Bonds Front Month Daily Spread Chart

I then looked at the 30-year bonds daily and weekly charts. The daily chart is below.

US Bonds - Thirty-Year Bonds (Globex) Equalized Active Daily Continuation

My preferred approach at this point is that if you are still short, it might be a good time to take profits or tighten up stops. I see a major support level at 147.12, and I think that aggressive traders may consider going long with stops below that level. If you are looking for a little longer term set up and like the long side, you may also consider going long and buying a put option as insurance.


Many ways to trade any market, many ways to lose money in any market and only very few ways to lock in gains - this one is not different. If you need help creating a trading plan, visit our broker assist services.

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