By Simit Patel of InformedTrades.com
(June 4th, 2012) It’s no secret that those who have been short US Treasury bonds over the past few years have not fared well. In the wake of the 2008 financial crisis, bond prices have soared; the rationale has been that with the US in a deep recession and the Eurozone mired in its own credit crisis, US Treasuries remain a safe investment.
It seems, however, that the situation may finally be reversing — and that bond market could be headed south. First, let’s take a look at the technicals: below is a chart of TLT, the ETF tracking long-dated US Treasury bonds. The volume spike coupled with a steepening of price acceleration over the past few days suggests the potential that the rally in Treasuries may be reaching a point of exhaustion. For speculators, this may be a safe time to try shorting the bond market.