Pre-Summary
Bonds have spent more than two years consolidating following their dramatic decline from the 2020 high. With Bonds once again approaching the bottom of that range, an interesting question is developing: Are Bonds setting a bear trap?
Bonds experienced a dramatic multi-year decline from their 2020 high before printing their multi-year low in Month 31 in late 2023. Since then, Bonds have spent more than two years consolidating.
The current multi-year cycle printed a significant low during Month 19 in 2025. Because Month 19 appeared early for a multi-year low, I have continued to watch for Bonds to eventually break below that low and extend the multi-year decline.
September is now Month 35, placing Bonds well within their timing band for a multi-year low.
That makes the current decline particularly interesting.
Bonds are once again approaching the lower end of their more than two-year trading range.
A break below the Month 19 low of 81.18 would extend the multi-year cycle decline.
However, if Bonds hold above 81.18 and begin to turn higher, we would increasingly recognize Month 19 as an early multi-year low. The current decline could then potentially establish a higher multi-year low, breaking the pattern of lower multi-year lows.
That could make the current decline a potential bear trap.
Cycle Alignment
Bonds are testing the lower portion of a more than two-year consolidation while deep in their timing band for a multi-year low. 81.18 remains the key level separating the two potential multi-year cycle interpretations.
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