It has been a rough five months in the bond market after the Treasury bond futures formed a negative “gravestone doji” at the end of August. This candle formation is often seen at major tops. The T-bond futures are down 14.2% from their highs while the iShares Barclays 7-10 Yr Treasury Bond Fund (IEF) topped out in October and is down almost 17%. Even the Treasury Inflation Protected Securities (TIPS) market has not been immune, as the iShares Barclays TIP Bond Fund (TIP) is down 6% while the high-yielding iShares iBoxx High Yield Corporate Bond Fund (HYG) is up 3.7% from the November lows. After the successful ten-year auction on Wednesday, the market is holding its breath for the 30-year auction later today, which may set up a trading opportunity.
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