have bond prices gone mad?

Discussion in 'Economics' started by Poole, Nov 26, 2007.

  1. Poole



    look at the 30 year and 10 year

    who is buying all these things?

    why would anyone buy something that yields 4%, and you lose half to tax, when inflation is double that?

    its like throwing your money away every year?
  2. As opposed to buy and hold stocks that are plummeting? Perhaps those buying the bonds are more concerned with capital preservation than short term interest rates... positioning the funds for a more efficient re-entry opportunity... just a thought...
  3. 10 year is going lower over the mid-term. Start building your long position, but keep in mind price direction is near random in the very-short term.
  4. Why not a flight to cash vs bonds? Bonds have an easy 5% of risk in them. The stock market perhaps 5-10% here at most.

    Just remember guys: the lower the yield goes, the more valuable the stock market becomes based on the same earnings.

    Waiting to buy 1370 ES.
  5. Usual herd-like mentality.....

  6. Poole


    well, i guess if people are really scared of banks, and the stock market, it makes sense

    only question is where is the top, whoever buys in last may end up losing a lot of % when the herd exits
  7. Poole


    oh I feel better now, its mostly hedge funds increasing their long bonds positions....

    at least they are long term strategic investors, instead of speculators with a 2 week attention span (...... heh......)

    and this report obviously excludes todays action and last weeks

    Nov. 26 (Bloomberg) -- Hedge-fund managers and other large speculators increased their net-long position in two-year note futures to the most since at least 1994 in the week ended Nov. 20, according to U.S. Commodity Futures Trading Commission data.

    ``It's the trade of uncertainty within the market and the economy,'' said Sean Simko, who oversees $8 billion at SEI Investments Co. in Oaks, Pennsylvania. ``The market's definitely pricing in additional Fed cuts.''

    Speculative long positions, or bets prices will rise, outnumbered short positions by 61,114 contracts on the Chicago Board of Trade, the most since Bloomberg began collecting the data in 1994. Net-long positions rose by 34,256 contracts, or 128 percent, from a week earlier, the Washington-based commission said in its Commitments of Traders report.

    Benchmark two-year notes rose today, with the 3.62 percent October 2009 note up 11/32 to 101 12/32 in New York, according to Cantor Fitzgerald LP. Its yield fell 19 basis points to 2.88 percent at 4:39 p.m. in New York. A basis point is 0.01 percentage point.

    Two-year note futures rose today, gaining 0.3 percent to a price of 105 11/32.

    Each Friday the CFTC publishes aggregate numbers for long and short positions for speculators such as hedge funds and institutional investors, as well as commercial companies that buy or sell futures to protect against price moves. Analysts and investors follow changes in speculators' positions because such transactions can reflect an expectation of a change in prices.
  8. dis


    The Fed buys bonds to inject liquidity into the banking system.