Eoin Treacy's view Bond futures prices or yields are the most common instruments for monitoring the fixed income markets but since pension funds and other large bond investors are total return oriented it is also important to view bonds from their perspective.

In Comment of the Day on March 14th I included the Merrill Lynch 10yr+ US Treasury Total Return Index in my analysis because of its consistency and because it reflects the motivations of total return investors. Today I added total return bond indices for the UK, Germany, Switzerland, Canada, Australia, Spain and Italy to the Chart Library.

While the US, UK, Germany, Switzerland, Canada and Australia indices have all been trending higher over the last decade, they picked up pace over the last few years as demand for safe havens has increased. Government support for a number of these markets in the form of quantitative easing has also been a considerable influence.

The US Index found support in the region of the 200-day MA from March and continues to extend its advance. The first clear downward dynamic is likely to suggest a peak of at least medium-term significance. The German, Japanese, Swiss and Canadian indices share relatively similar patterns. The UK Index also found support in March near the 200-day MA but has not broken upwards to new highs

The Australian Index has outperformed over much of the last couple of year and is currently most overextended relative to its 200-day MA and is therefore susceptible to a reversion towards the mean.

Just as the period from October to March represented a particularly strong period for stock markets which was susceptible to a pullback, the recent impressive performance of a number of the above indices begs the question how sustainable the pace of these advances is. The potential for a reversion toward the mean has increased.

Lest we assume that all government bond total return indices are in consistent trends, let us also examine the Spanish and Italian indices. The Italian Index encountered resistance in the region of the 200-day MA from June 2011 and dropped precipitously. It surged higher from November following ECB intervention but has encountered resistance in the region of the prior highs and at the very least has lost uptrend consistency.

The Spanish Index has been ranging mostly between 310 and 370 since 2005, representing the ranging, time and size characteristics of a Type-3 top as taught at The Chart Seminar. A sustained move above 370 would be required to question that view.