Feels like there might be support here at 4.50 $TYX. This is a no BS thread, let's keep it that way! I do not see very many guys willing to give FREE color from CBOT.
Guy behind me says his guys at SAC (Steve Cohen's monster hedge fund) are still flat, I would have bet a ton they were short into Greenspan this week, but guessed wrong. And he talked to them today and they were baffled why we broke so hard, ultimately I guess everyone thinks revaluation may be inflationary. He thinks his SAC guys will still get long 10's or 30's at some point. Did see some big paper selling in 30yr (5000+) near the lows though (and not stops).
Chinese reval is a joke. Just look at how much the buck has appreciated the last 6 weeks, their reval simply is a tiny adjustment, its neutral at best. As the 'basket' and its weighting is also unknown, any impact is no big deal, except to give some talking points to cnbc. Its similar to when the Fed would intervene in the buck and then do reverse repo to drain the monetary impact of injecting dollars. But I'd love to know hear more color.
The Chinese revaluation was a joke--------yes. Some of the moves in the bond market to react to this were not-----this may fuel more bond market action going forward. interest rate and inflation worries seem to be strengthening.
Did see an interesting position being rolled today in Ten-year options. Wells Fargo (goes through Carr desk) was long a ton of Sep 110 puts, so he sold those to buy the Dec 113 calls (as part of a combo diagonal). Did 25,000 of these so this mortgage guy is still worried about prepayment risk, any thoughts?
Maybe with stocks hitting 4 year highs, folks who borrowed last year are selling off equities and paying down mortgages. Wells is a huge player in retail mortgages, esp on west coast.
Exactly Tom, according to the People's Bank of China's news release the CURRENT central parity currency is the US Dollar and the trading band is still 0.3%. So as of right now, we basically have exactly the same system as prior; only difference is a 2% appreciation of RMB/USD and X% decrease in political pressure -- NO BASKET.
For the time being, the Chinese have turned off the congressional whining tap. Now, as soon as folks explain to congress-people what actually happened, the tap will get turned on again. Remember, some think yuan is undervalued by up to 30-40% and many suggested a 10% reval was the minmium, the white house would accept. But China has a rising unemployment problem, officially 9.5%, probably more like 20%, and they need to manage their home game for stability, not to impress the Fed, so they need/want those exports. Schumer's bill was for a 27.5% tariff on them, so there you have some of what the expectations are/were for a reval.