Good point. My problem is overconfidence coming from my ability to pick out the Dow Jones' reversal points (demonstrated in my posts) while insisting in trying to understand the structural differences between the bond and stock markets in order to gather a better understanding of both markets. Another source of overconfidence is that my target prices are usually met while my timing is poor (with bonds).
We have more downside. Getting closer! 108 I got an alarm on a 60 minute. I caught a nice bounce off 111 in the 30. My next level is 110 1/2. Tommmorow's Employment might be the catalyst we have been waiting for. Non farm Payrolls -Oct EST 85K Vs Prev's -35K Cons: 110K , Range-25K to 300K) Unemployment Rate - Oct EST 5.2% Vs Prev's 5.1% Cons: 5.1% , Range5.0% to 5.3%)
A close above 4.7 % Triggers a Sell on the Daily 10 Year Yield. 4.9 still seems to be next stop on the 30. Keep an close eye on demand @the 5 Year Auction Wednesday and an even closer eye on Thursday's 10 Year Auction! My bias remains long on dips.
Just from reading bloomberg.com and hearing some daily flows from some big funds out east there are still some guys looking for value. It seems Asian investors are looking at 4.70% in the Ten-year. I wouldn't worry about demand as much as how much inventory the primary dealers end up taking down out of the quarterly refunding. They took down more than half of those two-year and five-year TIPS auctions in October, and this kind of got the ball rolling to the downside (with the long end hit the hardest on a relative basis). I don't know if I'm interpreting that info the right way, but maybe for them it was buying new front end paper, and selling the long end of the curve to protect. Look at it this way, with the Fed going at a measured pace probably into mid 2006, they really have no one besides PIMCO to sell the front end to at a profit, whereas there are plenty of insurance companies and pensions to whom the primary dealers can sell the long end of the curve. Just my thoughts.
BCA Research: Bond sell-off near an end http://www.bcaresearch.com/public/story.asp?pre=PRE-20051101.GIF
Gonna be tough to get these things to trade higher today. Goldman has sold 7500 five years, Lehman has sold 6000, EDF Man has sold 4000, across the whole range, all in the five-year pit, and even more strange is locals have bought ALL 17,000. Most like FIT spreading out of it. Goldman buying NOB's as well, 4000 bought.