End of week Bond news at bloomberg. http://www.bloomberg.com/news/markets/bonds.html It looks like bonds should have rallied more today based on the news but they did not. I think next week will see bonds head lower. Staying short 10-year note since 109250 Regards, Steve
Nice report...staying short as well. I think today was just a micro 4th wave, rates should move to higher highs monday or tuesday. Tony
I think bond prices will take a break and go up a little for about a week before going down again after that. I kept my short position with March 114 puts that I bought a few days ago but yesterday at the end of the day I also wrote 110 puts that I plan on buying back later when I think that bonds are about to drop again. If it doesn't work out that way and bonds don't bounce back before going down further, I'll be stuck with a bearish 114-110 spread that should still give me a satisfactory profit.
Yes, I concur. Keep in mind that I'm a short term trader. If you need further support for my observations below, check my journal titled, "Bond Trader 2006". All times are CST. The failure to move above 113 05 at 0755, followed by the failure to move above 113 03 at 0825 led me to change my 0741 bias from long to short starting at 0840. I got caught up in chop up through my final short at 0900. I sold 4 ZB's at 112 29. This is significant as my normal trade is only 2 ZB's. FYI, prior to market open, I published my numbers for the day: 113 10 113 01 112 21 112 07 The GDP news was originally interpreted as positive for bonds, hence the initial spike up to 113 04 on the 5 min bar chart at 0735 bar. I went long at 112 29 at 0741. This was the start of my long bias. I called for covering half in the 113 04 area at 0755. At 0825 I urged caution. At 0830 I closed all long trades and stood aside. Price activity was weak, and very puzzling. I thought for sure we'd break to new highs. In any event, the next bars showed continued weakness, and as I mentioned I initiated the trade at 112 29. So, in conclusion, what I as a short term trader interpreted to be a long bias day turned out for the first two hours to be a short bias day. The bounce off of 112 11, followed by the struggle to get back up to 113 00 was puzzling, but I attribute that to strange late day trading. Next week should be interesting. I see further lows over the next few days, however, I change bias intraday, so don't hold me to a weekly forecast!
The suspicious price activity after GDP can probably be contributed to dealers (Greenwich, Goldman, Citi, etc.) using any uptick or rally in the long end to add to bearish steepening trades and bearish option structures. Have noticed this the last few days, many of the big put positions, like today the March 106-107-108 Put tree in the Tens, 10,000 were bought five minutes before GDP, and another 5,000 were added on our uptick off of the lows. Furthermore, the convexity call buying guys (Countrywide) bailed on some recent call purchases (April 109) before New Home Sales and are only willing now to buy them on fairly big downticks in futures (drop of 5-10 ticks, put it this way, they are not paying up on 30,000 like they did last week). Not to mention the Asian buying seems to have dried up a bit so that main supportive factor is not there. Only bid seemed to be if PIMCO is in lifting offers (doesn't happen that much, but did around 109-10 and again around 108-20 this week) or if oil begans to scream to the upside. It still seems like dealers and the Japanese want to let the long end cheapen up before they come in to buy a huge chunk of the upcoming 10yr and 30yr auctions. Just my opinion.
Yes, John! Very descriptive.... On the hourlys and dailys (yield) I see a 1-2-3-4. Expecting a 5th wave up beginning of the week and them maybe some pullback. The advance thus far has been very impulsive indicating lower bond prices over the next couple of months: 4.93% appears to be a given, looking more in the range of 5.07% - 5.60%. Tony
Good points! It's a big auction. Do you think sentiment is shifting or is this short term pre-auction jitters?