The financial markets have been panicking and it’s producing some huge swings across asset classes. One asset that may be producing a monster reversal is treasury bonds.
The flight to safe havens produced a sharp rise in the 20+ Year U.S. Treasury Bond ETF (NASDAQ:TLT). But that thrust higher was met with heavy selling the first 3 days of this week.
You can see this in the first chart below – a monthly chart the TLT.
Thus far, the monthly candlestick has produced a huge bearish reversal wick. We have a ways to go until month's-end, but if this reversal holds, it could be the largest ever.
And that would be very bearish for bonds on a longer-term time frame.
The second chart shows the same reversal for yields, but it’s a bullish reversal. Could the largest bullish yield reversal in history be taking place in the 10-year yield? It's possible.
The bond rally and yield declines have created great concerns in stock markets around the world. Could a bond top/yield bottom be good for stocks? It could in the short-term.