Are Bond Yields set to Rise?

One area where we're actually seeing a trend change in today's market is with bonds.  Our bond momentum indicator has recently rolled over from overbought levels giving a traditional sell signal (see chart below).  Personally, I had expected to see the yield on the 30-Year Treasury fall below 2% before bonds peaked.  While this may still occur and the bond momentum indicator could reverse back up, for the time being, this kind of action in the bond momentum indicator (rolling over from extremely overbought) is generally a confirmation that the bottom is already in for yields.

Mark Dodson, CFA

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