An interesting thing is going on when you look at the price of crude oil. Sure it has been rallying for some months and is at multi-year highs. And this week's early retreat raises speculation that the rally may be over.
But when you measure that price in the value of Treasury Bonds it tells another story. The ratio of crude oil to Treasury prices continues to move higher. In fact, it's on the cusp of a major breakout to the upside.
The chart above tells the story. After a protracted downturn in 2014 the ratio of crude oil to Treasury prices stagnated. It attempted a rally in early 2015 but fell back to a new low in 2016. A bounce from there took it back higher but it languished through most of 2016 and 2017. It was not until November 2017 that it made a higher high. And not until early 2018 that the weekly chart crossed the 200-week SMA. This was the first time crossing it since June 2014.
Now still moving higher, the crude-T-bill ratio has strong momentum. The RSI is rising and a bit overbought with the MACD moving up and bullish. The ratio is at the 2015 bounce-high and sniffing at a breakout. Will it bust a move higher? Sentiment is surely set up for that. With crude rising and Treasury prices falling, the ratio is primed to break higher.