TLT (20y+ Treasury ETF) broke through an ascending channel, a near term support level AND the 50 day moving average. $100 support from the mid-2009 high and, if that breaks, the 200DMA ($96.27 but rising) look like support. Will the two year lower high in TLT stick and confirm the 30 year bottom in yields? $100 and the 200DMA are very important levels to hold here.
IEF (7-10y Treasury ETF) is not out of that ascending channel yet and is still above the 50DMA.
LQD (Investment Grade Bond ETF) is in a MAJOR rising wedge and right around 2003 resistance. HYG (High Yield Bond ETF) is testing 2010 resistance. If I owned LQD and HYG in size I'd probably hedge away implosion risk. It all depends on Treasury yields going forward (credit spreads). Watch the actual Treasury yields and not the ETFs. However, if TLT continues to roll over and IEF follows suit, I bet LQD and HYG reprice. The question I have is, if that happens, is it due to credit risk, spreads widening due to inflation, or all of the above? Also you need to factor in QE2 as well. I'm all for the Japanese scenario and the 10-year yield going to 0.05%, but I'll let the charts decide (courtesy of FreeStockCharts.com).
TLT (20+ Treasury ETF)
IEF (7-10 Year Treasury Bond ETF)
LQD (iShares Iboxx Investment Grade Corporate Bond ETF)
HYG (iShares Iboxx High Yield Corporate Bond ETF)
HYG/Treasury yields give examples of interest rate risk. Credit risk and Treasury yields could decouple.