Photographer: David Williams/Bloomberg

The Great Bond Bull Market May Be Coming to an End

An obscure charting signal that went off just as the three-decade bull run in bonds started is close to reversing.

The yearly MACD chart -- moving average convergence and divergence -- for 10-year Treasury yields is getting very close to crossing the nine-year signal line. The two have met just once before, back in 1986 when the MACD’s slide below the signal indicated momentum was there for the sort of declines in yield that the current long-term bond rally has delivered. If the two cross in the other direction it would indicate the potential for sustained increases in yields.

The annual MACD is just 0.0203 below the nine-year signal line, with the gap shrinking from a 0.6401 chasm back in 1993. Yes, the lines on this chart move at a glacial pace, their current rate of change means they may not meet until some time next year or perhaps later. However, when this chart turns it tends to run a while.

Treasuries traders may need to get ready for the Halley’s Comet of chart points to appear. If it comes, it may be signal the end of the market as they and their forbears have known it.

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