i dont think there is anything wrong with them rallying a little today - they have been slipping for quite some time. but its not the kind of move that should scare anyone who was short/bearish.
thanks for the input. That's basically how I interpreted today's action. I didn't close the trade. Actually thought about pressing it w. some April puts, or possibly a bear call spread. But the action stayed steady & I just went to lunch and let it go. Moved on to other things. I'll keep the bond short tho for tomorrow's action. you betting on the pause? How exactly do the fed funds futes work? I'm not familiar w. them.
fed funds work easy - basically very similar to EuroDollars. the product settles at 1 minus FF at the end of the expiry month. FF is effective fed fund rate maintained by the federal reserve (usually very close to the target). Similarly to ED they consistently underestimate the possibility of hikes (or exaggerate possibility of cuts recently - that's at least my hope). Check CBOT website for more details. . I will reinitiate my shorts in bonds - but not just yet.
sounds cool. yeh today didn't do me good either. I did go ahead & sell the January 07 90 puts to make it a credit spread. Got that all together just before pause time Still thinking I might buy those back in short order for a bit of a discount on my original put position, and go back to betting on the bond tankage. But right now I'm long TLT effectively.
Just FYI, did end up covering those puts quickly & bought a few extra to scale in my bet. BTW my original post says I sold the 90 puts when I sold the 91 puts. I'm long the 90 puts. Sorry for the confusion. { } Okay drop bonds! Looking good for that today.
what a great day today with EDs down 10bps+ and indirect bid for 10yr in almost single digits. Let's see what Friday brings - I believe Core at +0.3% MoM is a real possibility. Industrial Production number may spoil it though...