Is The 30-Year Bond Bull Market Over?

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September 6, 2013 2:36pm NYSE:TBT NYSE:TLT

bullish buyMike Larson: Three decades is a long time. And for the past three decades, America has known nothing but steadily falling interest rates.

Oh, sure, there have been spikes during that time. It hasn’t been a one-way trip. Federal Reserve rate-hiking cycles and the occasional bond market rout have interrupted that process. But, by and large, it’s been a consistent, steady march lower from around 20 percent for short-term rates and 15 percent yields on the 30-year Treasury bond.

That decline is now over. Kaput.

That’s what I believe.

That’s what many experts believe.

Heck, that’s what at least one Fed policymaker has gone on record saying he believes.

And that’s what the market is telling us day in and day out — all we have to do is listen to it!

Just look at the shocking move we’ve seen in the 5-year Treasury Note:

Click for larger version

You can see how just yesterday, the yield on the 5-year note exploded to 1.85 percent. That’s the highest going all the way back to June 2011 — 27 months ago! You can also see that we’ve taken out a downtrend that dates all the way back to 2007, and that long-term moving averages are turning up.

How big of a move is this for 5s? Yields have now surged 188 percent from the early May low of 0.64 percent. That just underscores why I’ve been saying for a year now — bonds were a disaster in the making and the third bubble in a rolling series of them created by misguided Fed policy. While we could pause to consolidate these gains at any time, the long-term, multi-year trend toward lower yields has clearly been broken — and there is still a long way to go to normalize rates.

And that’s just U.S. Treasuries! The carnage is even worse in other parts of the bond market, like municipals. One trader quoted in Bond Buyer yesterday described that market like this:

“It feels like you’re never going to hit bottom and it’s taking forever to get there … It’s more of a complete abandonment of the market by the buy side. There is no money there.”

My take?

The proof is there for all to see. The 30-year bond bull market is over, and we are now in a long-term bear. That means you should expect interest rates to rise in the coming few years — and protect yourself from the fallout using the strategies I’ve been sharing over the past several months.

Related Tickers: iShares Barclays 20+ Year Treasury Bond ETF (NYSEARCA:TLT), ProShares UltraShort 20+ Year Treasury ETF (NYSEARCA:TBT).

Mike LarsonThis article is brought to you courtesy of Mike Larson

Money and Markets is a free daily investment newsletter published by Weiss Research, Inc. This publication does not provide individual, customizedinvestment or trading advice. All information is based upon data whose accuracy is deemed reliable, but not guaranteed. Performance returns cited are derived from our best estimates, but hypothetical as we do not track actual prices of customer purchases and sales. We cannot guarantee the accuracy of third party advertisements or sponsors, and these ads do not necessarily express the viewpoints of Money and Markets or its editors.

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