Bonds Setting Up For Another Leg Down
20+ Year Treasury Bond Fund (TLT) has fallen over 13% from its peak. Market technicals suggest that bonds could continue to fall creating more losses for investors.
I have been writing about the long-term change in trend for bond prices since October of last year (Bonds – A Ticking Time Bomb I and Bonds – A Ticking Time Bomb II). After rising for over 37 years, bonds are transitioning into a period of sustained decline. This is going to most adversely affect those investors that are near or in retirement since they typically have the greatest percent of their portfolio invested in this asset class.
Below is a chart of a 20+ Year Treasury Bond Fund (TLT). As I have noted, bonds peaked in July of 2016, after which price fell sharply forming a bottom at the beginning of last year. The advance that followed failed to reach its previous peak and thus formed a lower high.
Today, TLT has fallen sharply below its short-term trend-line which increases the odds that we are going to see more losses in bonds over the near term.
Now is the time to review your bond holdings, not later after you have larger losses. Shoot me an email to setup a time to review your holdings. I can suggest ways to protect yourself against an environment of falling bond prices.
Craig Thompson, ChFC
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