Buy Alert! Bullish Breakout Bond ETF Under Way

by Vlad Karpel |

RoboStreet – August 22, 2019

Bond Yields and the Race to Zero

Global central banks are exercising tremendous vigilance to stem the tide of deflationary forces that threaten to take many developed economies into recession. Bond markets around the world are seeing aggressive purchases of all maturities with no less than 16 countries seeing negative interest rates, primarily in Europe. The race to zero yields has already happened in that part of the world and now there is a rising chorus of economists, hedge fund managers and market participants forecasting that U.S. Treasury yields are also headed to zero.

The strong dollar is acting like a huge magnet, drawing capital from all around the globe that is targeting the strongest currency AAA-rated debt and yields that are considerably higher than anywhere else of similar credit rating. A look at where global 10-year sovereign yields are today and the one-year change is remarkable, the most glaring being Germany at -0.65% and Switzerland at -0.98%. And to think Portugal, Italy and Spain 10-yr debt is yielding well below that of the U.S. shows just how distorted the market is and why the argument for U.S. yields falling further makes sense.

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10-Year Government Bond Yields

United States » 1.58% -123
Canada 1.26% -101
Brazil 7.19% -491
Mexico 6.95% -83

Europe, Middle East & Africa

10-Year Government Bond Yields

Germany » -0.65% -99
United Kingdom » 0.50% -76
France -0.36% -105
Italy 1.32% -172
Spain 0.13% -124
Netherlands -0.51% -96
Portugal 0.16% -163
Greece 1.94% -222
Switzerland -0.98% -81

Asia Pacific

10-Year Government Bond Yields

Japan » -0.25% -34
Australia » 0.91% -163
New Zealand 1.07% -150
Hong Kong 0.96% -104
Singapore 1.78% -60
South Korea 1.22%
India 6.56% -126


The trade war has taken a much bigger toll on Pan-Asian, Latin American and European economies for sure and more U.S. tariffs on Chinese imports are coming as of September 1. About $160 billion in goods will not face tariffs until December 15 – of which school supplies, sporting goods, clothing, shoes, and eyewear will have the most impact on U.S. consumers. So, there is growing concern that the forward economic data is going to slip and make the bond market a formidable investment proposition.

Presently the stock market is in a fairly well-defined trading range with support for the S&P down at 2,800 (200-day m.a.) and resistance at 2,940 (50-day m.a.). The recent rally off support was fairly broad-based with the retail sector being the surprising leader and indicative of a confident consumer that is enjoying the benefits of lower interest rates for financing all manner of large and small purchases.

As of Thursday, Fed governors meet in Jackson Hole, WY at their annual three-day economic symposium.  The symposium hosts about 120 attendees each year, according to the Kansas City Fed. The attendees include central bankers, Federal Reserve system members, economists, financial organizations, academics, US government representatives, and members of the press. It will be the first time that investors will hear from Fed Chairman Jerome Powell since the July FOMC meeting when the market reacted sold off after he called the rate cut a “mid-cycle adjustment” that implied no further rate cuts for forthcoming. He later walked back that statement and markets recovered.

A string of weaker data from China and Europe ignited full-blown expectations of further rate cuts and fiscal stimulus to support those economies, which lit a fire under the U.S. Treasury market. The most widely traded bond ETF – the iShares 20+ Year Treasury Bond ETF (TLT) made a sudden and sharp move higher to reflect the rush of capital into the U.S. bond market.

After hitting a fresh all-time high of $148.60, shares of TLT have dipped back down to $144.30 and are still overbought per my Tradespoon indicators. While looking out past one month, the probability of further gains for TLT is in-store, over the very near term there is a high probability of a continuation of consolidation to a lower level that will present an attractive entry point and one that I intend to take full advantage of for our RoboInvestor subscribers.

Coming into this crucial test for the Fed and the market per the looming tariffs, the current RoboInvestor Portfolio is defensively positioned in consumer staples, utilities, healthcare, aerospace defense, and fintech. Normally, we maintain about 20 positions when the market has strong tailwinds, but at this time we are long just 9 holdings with my eye on TLT as a potential addition in the next couple of weeks.

Just like anything in the market, timing is everything and having the power of AI to construct great trades is what separates RoboInvestor and Tradespoon from all other advisory services. My AI platform has produced an 87.64% winning streak, which is unheard of anywhere in the advisory marketplace today. And we’ve produced these fantastic returns utilizing stocks like Walmart, Microsoft, JPMorgan,, PayPal, Honeywell, and Coca Cola along with select ETFs.

The second half of 2019 is already proving to be a much more difficult investing landscape, fraught with more uncertainty and volatility. Don’t be navigating this market alone. Take advantage of the AI tools typically reserved for wealthy hedge funds. Join RoboInvestor today and start realizing the positive difference in your portfolio tomorrow.

 “I’m investing my own money in each and every stock as my AI platform identifies.”

And remember we’re not talking about day-trading here.  I’m looking for 50-100% gains inside of the next 3 months, so my weekly updates are timely enough for you to act.

Click Here – To See Where I Put My RoboInvestor Money

*Please note: RoboStreet is part of your free subscription service. It is not included in any paid Tradespoon subscription service. Vlad Karpel only trades his own personal money in paid subscription services.  If you are a paid subscriber, please review your Premium Member Picks, ActiveTrader, MonthlyTrader, or RoboInvestor recommendations. If you are interested in receiving Vlad’s personal picks, please click here.