I see bonds somewhat going sideways but at the same time loosing another point by early May. The bulls won't get in before the second week of May because: 1. The market is still pricing strong growth and higher inflation; 2. Next week is a 3 1/2 day week for bonds; 3. Last two weeks of April will be packed with Fed talk (Bernanke; Yellen; Moskow; FOMC Minutes; Beige Book) supported by strong economic data. 4. Then, right after that, major auctions; an employment report; and an FOMC meeting. Whoever said "patience is the mother of all virtues" must have been a bond trader.
Steve, The way you exposed your vision remind me something like 'trading a bond scenario'. Anyone knows how such a qualitative scenario trading could be organized and formalized to be tradable effectively? I mean a software where the trader can input these observations, give them a weight, how their influx could propagate over time, etc. so trying to grasp what/how/when to place his bet?! Maybe it's what the neural nets are used to be trained?...
That's exactly what I trade: stories. They tell me very early when I'm wrong or right by comparing market reactions to scenarios. I am not a big fan of neural networks as they are just another form of curve fitting. Also, the "neurons" are mathematical operators that translate numerical inputs into numerical outputs which constitutes a severe limitation to developing the kind of understanding I want. The stories I trade come from a compact representation of a complex world that I exploit to derive logical interpretations.
PIMCO was still selling premium Friday, but not in their normal way. After the 30yr was hammered to the lows and began to trade back above 20 they began selling the Sep 111 calls in the 30yr (about 7000 from 44 up to 46 ticks). On a huge down move like Friday more often than not they will be put sellers, but this tells you they may be scared to sell puts on the downside, and that small uptick on Friday from the lows is the only sizable uptick we may see for a couple weeks. At least that is what a few of us were guessing they were thinking. The amount of 30yr put buying on Friday combined with that enormous 10yr condor was just unbelievable. Not to mention, before we broke Morgan Stanley came into the 5yr and sold 10,000 June 105-105.5 Call stupids vs. buying 10,000 June 104 puts, did this trade at a 2 tick credit and evens (so it was a freebie), it settled at an 8 tick profit. That was a huge sign the bid after the number was very short-lived.
Mcurto Sounds like they all see the "writing on the wall". Are these guys usually right? And if so, who takes the losses ... foreign central banks?
38 trillion dollars of securitized public and private debt, not to mention derivatives, should put the thrill back into watching bond quotes....