During the on-going long term bond bull market since 1981 there have been six approximately 12-18 month long bear corrections. The corrections are :1983-84, -25.2%; 1987, -24%; 1993-94, -25%; 1999-2000, -22%; 2009, -20%; and in the current correction of 2012-13, -15.4% to the lowest daily close on August 21, 2013. The monthly 30 year T bond chart shows these six major corrections and many smaller ones since 1981.
Bond sentiment has grown quite bearish lately with many comments and articles announcing the beginning of a great secular bond bear market. Much of this is based upon fear (or joy) that the US FED will "taper" their bond buying or even tighten short term rates and bonds will therefore have no where to go but down. Granted that I have written my belief that bond rates have been lower that they "should have been" since about 2003. This belief was based upon the Kondratieff wave history since the 19th century with interest rates normally bottoming when crude goods/commodity prices and wages and incomes bottomed. Crude goods/commodities bottomed this time between 1998 and 2003, but rates did not. The reason may simply be due to the fact that the US dollar dropped 41% against its major trading partners' currencies from 2001-2008 in the absence of stronger economic growth which would normally have sent interest rates up as well. All of this transpired while China and other new growth nations outperformed economically. Thus crude goods prices rose on this demand and a major US dollar bearish move. The Kondratieff wave is a world wide phenomenon, not just a US or developed world happening as in earlier centuries.
Several analysts have pointed out that the Tbond decline and rate rise since mid 2012 has occurred at the same time that the expected inflation rate, as determined from the ten year T note rate minus the ten year TIPs rate, fell from 2.6% to 2.0% several months ago. This is unprecedented and can only be explained as excessive negative bond sentiment in the absence of an acceleration of inflation.
My view is that the $USB 30 year chart would need to fall to 120 or lower from its current level of nearly 131 to prove that the very long term bull market has ended. It could happen, but I am betting there is another bond rally out of this oversold excess. People who have moved out of bonds and into stocks in recent months may have sold the low in the former only to buy the high in the latter.