I’ve been waiting for a buy signal in bonds for what seems like an eternity, and it has finally arrived.
The strong rally in bonds during November has confirmed a monthly buy pivot in US 2-year, 10-year, and 30-year bonds.
Until the buy pivot is negated, I will view bonds as a buying opportunity.
US 10-year bond yields have dropped 70bps after tapping 5.02% in late October.
If we see a monthly close above 5.02%, I will back off from my bullish thesis. But until then, I will be looking for good entry points into bond exposure.
The shift in sentiment is showing up in many places with a monthly buy pivot confirmed last month in the S&P 500, gold, silver, US bonds, and copper.
The US Dollar Index confirmed a monthly sell pivot and as I show you in today’s Closing Bell video, the odds of further downside are high.
Other commodities aren’t perking up that much, so I don’t think we are about to witness a sharp rally across the board in commodities as the US Dollar falls.
But gold in US dollars is looking primed to test the all-time high. After three years of treading water, I am interested to see whether a breakout above the all-time high could lead to a strong uptrend for a number of months.
If bonds start rallying, real yields should fall from their current elevated levels and take pressure off gold. A falling US dollar will also help gold to finally break out of the range it has been in.
I reckon a million analysts have predicted a breakout from the current range over the last three years and been wrong. I may be another to add to the list.
If the rally fails to carry on yet again, I will quickly change my tune and head back to the sidelines. But for now, I am cheering gold on and getting prepared for a sharp move higher.
Click on the picture above to watch my latest instalment of the Closing Bell and if you like what you see why not ‘like’ the video on YouTube? Go on, you know you want to.
Editor, Fat Tail Daily