Nothing Ever Happens, Right?

Overnight we saw rates in Japan push to seventeen year highs in some cases, as pressure mounts on the Bank of Japan to raise rates at their December 19th meeting (the FOMC is next week on the 10th, where a cut is now expected). The push higher in rates in Japan is being met with rates here in America moving higher today, too. 

On the TLT ETF for Treasuries (bond prices, inverse to rates), on the daily and then monthly charts, respectively below, we can see today's selloff as rates across the curve surge higher. 

The first daily chart shows a head and shoulders bearish top. And when we overlay the daily and with the monthly it suggests the recent multi-month TLT bounce may have been merely a doomed bear  market rally. After all, does that monthly chart truly look like a convincing bottom to you? To my eye, it does not. 

Thus, the presumption is that TLT is still headed much lower and rates are headed higher, despite how many are pining for low rates on the long end of the curve, be it retail, institutional, or political. Recall that The Fed only controls the overnight rate with its monetary policy actions, and not the long end. 

That said, the prevailing sentiment is such that "nothing ever happens." In fact, the above photo is a meme associated with nothing ever happening, apparently. The meme refers to all of the apparent bearish headlines, macro data, economic developments, etc., and yet markets keep chugging higher and shrugging everything off. To be sure, that is the modus operandi of an extended bubble, to the point where it seems like markets have permanently changed, entered a "permanently high plateau," and permanently ignore bad news. In due time, reality and gravity reenter the picture for markets. 

And I have strongly suspected all along that the bond markets of developed economies would be one of the first asset classes to sniff out when reality begins to matter again. With the Yen carry trade beginning to unravel amid higher rates in Japan, plenty of capital should be shuffling around in due time.