The Treasury Market rallied at the end of last year, but has since consolidated its gains and sold-off. Let's take a closer look at the sell-off.
Treasuries have been falling since about a week after the stock market started its early March rally. Since then prices have moved through all the SMAs. Now the chart has an incredibly bearish bent -- prices are below all the SMAs and the 10, 20 and 50 day SMAs are in their most bearish orientation possible (shorter below longer and all moving lower). Finally, prices are now below the 200 day SMA.
However, all is not lost in the bond market.
Money has been moving into the high yield market. Notice this chart of high-yield bonds started to rise about the same time as the stock market. Now it is in a very bullish posture -- prices are above all the SMAs (including the 200 day SMA), the 10, 20 and 50 day SMA are all moving higher, the shorter SMAs are above the longer SMAs and the 10 and 20 day SMA have moved above the 200 day SMA.
Like the high-yield market, the long-term corporate market also rose in conjunction with the stock market. Prices are above the 200 day SMA and are using the 20 day SMA for technical support right now. The 10, 20 and 50 day SMA are all moving higher and all three have also crossed over the 200 day SMA.
In other words, we've seen a reallocation funds within the bond market from Treasuries to longer dated corporate and junk issues.
