Treasuries Pause Near Resistance Before The Next Rally

Our research team believes the US Treasuries and the US Dollar will continue to strengthen over the next 2 to 6+ weeks as foreign market and emerging market credit and debt concerns outweigh any concerns originating from the US economy or political theater. Overall, the major global economies will likely continue to see strength related to their currencies and debt instruments simply because the foreign market and emerging markets are dramatically more fragile than the more mature major global economies.

We believe the US Treasuries may surprise investors by rallying from current levels, near price resistance, to levels above $151 on the TLT chart. 

Our belief is that further economic concerns related to trade, foreign economic metrics and data and the forward perspective of many emerging and foreign markets will continue to weaken much more dramatically than the US or other major global economies. Thus, we believe capital will continue to pour into the US and more mature major global economic markets (Canada, Japan, Great Britain, Swiss) as a move to safety just as capital is moving into the precious metals markets.

When fear enters the global markets, capital seeks out the safest and most secure environments for investment. If the rest of the world’s economies are becoming weaker and more fragile as trade and economic factors continue to hit the news wires, the more mature major economic countries are naturally going to benefit from their more robust and secure economic power and strength. The flight to safety will result in capital moving away from risk and into the safety of these more mature economies simply because they provide a level of security and risk aversion that can’t be found elsewhere.

DAILY TLT CHART

This Daily TLT chart highlights the resistance level that we believe is current constricting the current price advance from breaking higher. We believe this resistance channel is causing the TLT price to pause below $147 and will continue to keep prices within this channel until some economic news event or positive US economic news item pushes the price higher. The US and global markets are waiting for some type of news event before attempting to make another move. We believe the future news will result in an upside technical breakout and a new rally towards the $152 to $155 level in TLT.

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