By Big Picture, I mean this year, so I am saying that the low for the year in price( high in yield ) is near. It is a very reliable seasonal pattern in Bonds, for the market to make it’s yearly low in the June/July time frame. Then typically a rally occurs ( drop in rates ) through the end of the year.
There are cyclical economic reasons as to why this happens, but I focus mostly on what happens and trying to take advantage of it, as opposed to getting too tied up in the analysis of the why, etc..
I do not know what yield will correspond with the low, but I would guess not much higher than the current, no more than 1/4% more. I am not in the camp that assumes that the 10 yr rate will necessarily be higher than it is now at a later date. Based on the long term downtrend in rates if you look at weekly and monthly charts of them, we could easily be lower in 2 years than we are now.
However, my comments were mostly based on what is likely to happen between now and the end of 2007. It is not meant to be a mysterious comment, but the full explanation of this pattern is more than I am prepared to go into here. I was just trying to add some insight from a traders perspective.
As I have stated before, and always believe, I could be wrong.
