The Chart Manager - John Gajewski

Earlier Bond Outlooks

Outlook: Bonds

Trendline support holds, but rally will be delayed

January 14, 2006

Chart of outlook for Australian bonds as at 14 Jan 2006

A higher low in mid December followed by a rally through the mid-November high re-affirms the Australian 10yr bond’s bullish position.

My US bond outlook however is bearish, at least in the short to medium-term. That aspect will work against the AUS bonds rising over the next couple of months, but it should not take it off the long-term path.

An intermediate time vibration is rolling over now, so prices should peak within a couple of weeks and prices should retrace the gains of the past couple of months. That drop should not exceed the base upward trendline around 94.500. It may be as shallow as the mid-November high of 94.660.

But eventually the rally should resume for a new high (above 95.440) by the middle of 2006. That move will complete a large rising wedge pattern from the 2000 low to complete the multi-decade upward trend from the mid 1980’s.

A drop through the last low of 94.390 however, will trigger a decline until mid 2006 and back to the 2002 low of 93.350.

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