10Y UST Auction: 'managed' to get finally a good one?

Discussion in 'Financial Futures' started by Bernard111, Nov 10, 2005.

  1. landboy

    landboy

    The most reasonable explanation I can think of behind late-day is maybe reallocation of assets into safe haven... PPI I think is gonna be more of the same, slightly above expectation but within reason...

    All I know is, we got a higher low, that's all I can ask for right now
     
    #21     Jan 12, 2006
  2. Wouldn't the record high indirect bidder in the TIPS be a sign someone is thinking inflation might pick up again? I don't know the answer to that but TIPS are usually preferred when someone is forecasting inflation.
     
    #22     Jan 12, 2006
  3. mcurto

    mcurto

    Exactly, I wouldn't get too bullish Treasuries if there was huge demand for inflation hedges (which is essentially what TIPS are) even if they are cheaply pricing inflation. Seems like the dealers are more willing to sell size into the uptick then get crazy long just yet. They have probably flattened a bit since earlier this week, so there may be more of an underlying bid, suprise PPI (vol has to pick up sometime) and the bottom completely drops out of the market and the near record longs puke up their enormous position. Most dealers looking for bearish steepening but their timing is way off as of late.
     
    #23     Jan 12, 2006
  4. landboy

    landboy

    If we don't get much of a bid for regular ten yrs then ya I think that would definitely be a sign that foreigners are scared.
     
    #24     Jan 12, 2006
  5. #25     Jan 12, 2006
  6. landboy

    landboy

    Who's this Chicago firm that purchased all those Calls? I wonder what's going on in their heads
     
    #26     Jan 13, 2006
  7. mcurto

    mcurto

    I don't know if you are joking or not but Bank One (which is doing the business for the Countrywide Mortgage Service Hedging Desk) bought a boatload of the May 110 calls this morning immediately after PPI and throughout the day. Probably about 15,000 to 20,000 all day, he is long long size in the March 111 calls (about 40,000). I would look for big convexity buying around those corresponding yield levels in cash. Finally decided to reverse and get long a few today, got smoked trying to short this market later this week.
     
    #27     Jan 13, 2006
  8. landboy

    landboy

    Ya, felt this market fell off a cliff after the lousy auction in 5s, I think we need to make higher highs soon on good volume or we may be in another sideways market... Speaking of mortgages/convexity, housing numbers coming out soon, hope they get the same reaction they did last time...

    thanks for the info
     
    #28     Jan 13, 2006