Bonds and interest rate movements stage potential but temporary change in short-term trend

The bond bubble is widely perceived now which could be harbinger of a turn but also mere recognition of the strong trend. The chart of the US 2-year Treasury note's yield (below) shows it's already turned up, unlike the 10-year which saw its yield hit new lows. The ratio chart of the 2-year:10-year confirms the point by showing a two-step up already occurred. Short-term anyway, this is bearish for bonds and bullish for equities. Though as we know it's probably just a hiccup in the bigger trend. TLT (the Treasury bond ETF) saw high volume on an intraday reversal which is a bearish candle - again, at least for now. We may expect Treasuries generally to seek and test moving averages such as the 13-day ema, 20-day ma and perhaps 50-day ma. It would be consistent with a bounce in equities too, at least for several trading days.

Corporate bonds represented by the ETF (for higher quality corporate bonds), LQD, have seen an almost parabolic spike on high volumes recently. Looks like it may be capitulation buying that's getting overdone. The price shot past a Fibonacci extension I'd marked at $109.90. So watch it if you're in this market - keep an eye on whether it weakens off under that level. If so - as I'm guessing - then it too is likely to test moving average support. Doesn't mean that the top is in, either for LQD or Treasuries. Just means that this market has gotten overbought and is subject to some pullback that will probably happen soon. A pullback could represent one more big dip for another, later effort to test even higher.