The Long Treasury Market

A rebound this year in the long T-bond price was to be expected after the needlessly bad period
in 2013. But recovery in price has certainly exceeded my expectations, topped off by the
furious rally starting in Mid- Sep. as equities players zipped out of stocks into bonds on the
wind-up of QE and global economic growth concerns. The TLT 20+ year T-bond fund has
sold down from a panic risk-off top in recent days but does still rank as overbought against the
200 day m/a. TLT Daily

The end of QE does signal a tightening of monetary policy and that is why the long Treas. has
rallied since the get-go this year. Overbought as it may be, the TLT remains in a well established
uptrend in price.

The trading band on the TLT has narrowed in recent years from 80 - 130 to a range of 100 - 120
which contains most of the trades. This reflects the Fed's determination to keep its short term
ZIRP policy in place until the economy and the job market improve further and until there is
more evidence that the inflation rate can sustain a cyclical acceleration which would further
indicate that the US is moving on a more nearly cyclical path. Now, it must be seen how well
the economy can do without QE.