We have seen many rallies and sell-offs in bonds over the last several years. Everyone has known that interest rate normalization would eventually occur, but none could predict when due to an often dovishly cautious MPC (monetary policy committee).
This time it looks like the bond market, perhaps with a little bit of a swift kick from President-Elect Donald Trump, has made the Fed’s work easier for it.
The explosive rise in 10-year treasury rates since clearing resistance at the 50-week moving average has virtually eliminated any significant obstacles until the market encroaches upon 2.38% to 2.50% levels.
More importantly, the 3-year bearish channel in which 10-year rates have been confined looks to be finally over. The tide or trend has changed and bond rallies should be sold as the bear is just waking up from a long hibernation. (See chart below)