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COMMODITY INSIGHT
152 Ennis Lake Road, Ennis, Montana
(December 14, 1997) FINANCIAL INSTRUMENTS: United States Treasury bonds ended the week at their best levels in two years when March futures closed at 120-12. From the previous weeks low of 117-15 to this Friday's high of 120-13, bond prices are up nearly 3 full points. That five-day rally was one of the most impressive rallies I can remember for the bond market in a long time.
It can be rightfully argued that bond prices are rising because of the doom and gloom currently smothering every market on the board. After all, bond prices thrive in an environment of doom and gloom.
Those that do not feel that the entire Big Four are choking on doom and gloom simply need to look around and see what is taking place across the board. The past three months have been three of the most bearish months anyone has witnessed in 25 years.
All my long-term work has been suggesting that bond prices are in the process of carving out a long-term top. Pricewise, bonds should run out of steam somewhere around 120 to 124. With nearby futures ending the week at 120-12, prices are at the bottom end of that range.
It will not take much for bond prices to peak and then drop substantially from current levels. I would rather probe the short side of bonds at this time rather than the long side. Bonds should run out of steam very soon.
Jerry F. Welch
COMMODITY INSIGHT |
BARNES BROKERAGE CO., INC. |
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