U.S. Bonds Starting to Look Pricey After a Big Move It wasn’t a pretty week for stocks. Bonds, however, were another story. Investors ran to U.S. Treasury 10-year bonds and yields fell, as global rates incrementally turn negative and the economic implications of trade worries deepens. (For more see page 3)

However, 10-year bond yields (bond prices move inversely to yields) have now declined into a technical band defined by a 50-62% retracement of the 2016-2018 rebound after downside moves from 2018 highs. This size retracement is often a level from which rebounds develop, which to me raises the question of whether bond yields are getting overdone on the downside. That is, bonds might be pricey.

What to do?

Given the weekly relative strength index momentum in the bottom panel (see below chart) is as oversold as it was in 2016 and at other important inflection points, I expect a yield bounce to develop near current levels and would caution investors from allocating further exposure to bonds at current levels.

US 10-year bond yields - Weekly

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Here are my noteworthy leaders and laggards for the week.

While defensive leadership in utilities and staples bounced higher in May, they have yet to show any strong technical evidence of actually building a new uptrend....

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