Bonds and Rates Summary

黄河之水天上来

Bonds and Rates Summary

• Bonds made a sharp top near the 13 month PEI cycle and are Neutral since Nov. 30, 07 but have likely seen the highs.
• The 13 month PEI cycle low is upon us and Rates are likely to rise into mid 2008, but short term rates should rise much less.
• The large rate cuts from the Fed confirms the 6 year cycle high and suggests rates will head lower again towards year end.
• Rates are headed for a major 60 year cycle low near 2010 and will be very volatile as major forces work to turn them higher.

The PEI 13 month cycle low is hereThe 13 month PEI cycle low is upon us and Rates are likely to rise into the mid 2008, but short term rates should rise less.
[size=-1]Charts courtesy of StockCharts.com

[size=-1]Charts courtesy of StockCharts.com


Fed cut confirms the 6 year cycle high in RatesThe 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 lower Rates into the next 4 year business cycle low into 2010.
[size=-1]Charts courtesy of StockCharts.com

[size=-1]Charts courtesy of StockCharts.com


The 30 Year Bonds are approaching their 60 year cycle highThe 30 year Bond broke below a 20 year uptrend line twice and recovered, suggesting the next cycle high in 2009 will be the final top of the 30 year bull market in Rates from 1980 to 2010.
[size=-1]Charts courtesy of StockCharts.com

[size=-1]Charts courtesy of StockCharts.com


The Yield curve suggests that short Rates will drop fasterThe Yield curve has been inverted in the second half of 2006 increasing the risk of a recession in late 2007 or 20008. It has since turned down sharply in early 2007 due to subprime concerns, which are likely to negatively affect the economy, possibly to the point of recession. This chart suggests that the Fed will have to lower short-term rates to mitigate the negative effects of the subprime mortgage problems.
[size=-1]Charts courtesy of StockCharts.com