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Bonds reacted violently to China’s devaluation overnight with heavy buying across the curve within an emerging trend of selling at the short end and buying at the long.
Here is the 2 year yield:
Even after last night’s 7% shellacking, the trend remains firmly up within a very convincing ascending triangle pattern. This chart is very bearish for bond prices (and long Fed rate hikes).
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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
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