Shorting US bonds

Discussion in 'Journals' started by mtzianos, Jan 7, 2005.

  1. In a previous article of mine in this thread, I mentioned the activity in bonds by Carribean Banks (usually home for various hedge funds)

    In article

    there is an interesting table of the origin of money flows into US bonds.

    Apparently those "Carribean Banks" were by far the largest buyer (+$23bn) of US bonds during January 2004, which coincided with the huge rally / short squeeze in bonds and allowed the dealers to offload their longs. Despite e.g. Japan lightening up their positions by $11bn, China/UK staying put etc

    Any ideas/theories who might be behind the "Carribean Funds"? The author of the abovementioned article suggests it's actually a covert operation by the US gov, buying its own bonds (not openly via P/T OMOs, but indirectly via those "Carribean funds").
    #41     Mar 20, 2005
  2. As per latest TIC data, again "Carribean Banks" absorbed new debt issuance and the (slight) selling of US bonds by Japan and China during since last report.

    They (Carribean funds) are now #3 holder of US debt in the world.
    #42     May 18, 2005
  3. Urkel


    These carribean funds are hedge funds.
    #43     May 18, 2005
  4. Urkel


    I have a question for you guys who are shorting the 10 year/bonds. What signals are you seeing that the bull market in bonds is over? (BTW I know you guys are out there)

    I am not being a smart ass or anything like that but I trade the 10 year, and it just seems like nothing will prevent the 10 year from testing, and breaking the 4% yield. From a macro standpoint the demand for long dated treasuries does not appear to be disappearing anytime soon.

    I cant trade with biases like "I'm bullish or bearish", thats how I lose money. I feel as though mentally I am getting to bullish on bonds which is not good.

    I would like to know

    1. What is influencing people to put on short positions in the long dated treasuries?

    2. What will cause long dated treasuries to fall eventually?

    BTW, save the "bonds are too high, the Fed is raising interest rates" comment.
    #44     May 18, 2005
  5. 10y sold off after the release. Shouldn't it be the other way around? The numbers didn't look that great.

    Released on 5/19/05 For May 2005
    General Business Conditions Index, Level
    Actual 7.3
    Consensus 18.0
    Consensus Range 12.0 to 21.0

    The Philadelphia Federal Reserve's manufacturing index, which tracks the Mid-Atlantic region, fell ominously in May, down to 7.3 from 25.3 in April.

    The reading is still above zero, indicating that more respondents continue to report expanding rather contracting conditions. But the reading unquestionably indicates that growth is slowing and quickly.

    The Empire State index, released last week, plunged into the negative category indicating contraction in the neighboring New York manufacturing sector. The ISM's national manufacturing index is still firmly above its break-even point of 50, at 53.3 in the April reading. Note the ISM index historically moves in small increments, suggesting that a sub-50 reading, at least for May, is not likely. But the ISM as well is clearly showing that growth in manufacturing, so strong in 2004, is decelerating at a quickening pace.

    Back to the Philadelphia Fed report. New orders, an indication of future business conditions, fell back sharply to 15.0 vs. 20.3 in April.

    Shipments dropped very sharply, to 14.9 from 29.4. Delivery times improved sharply, to 0.5 from 5.1. This indicates that supply chain constraints, such as availability of transportation or access to raw materials, is freeing up quickly -- again pointing to slowing conditions.

    Employment growth was very disappointing, at 5.4 vs. 16.8. This reading suggests an unusual nimbleness among manufacturers, who may be quickly cutting back on hiring in anticipation of slowing demand.

    Prices paid, at 30.9 vs. 50.5, and prices received, at 15.7 vs. 28.0, similarly showed declining pressures, consistent with slowing demand. The change in the price readings this month is dramatic.
    #45     May 19, 2005
  6. Questions like these, followed by dead silence. :D
    #46     May 19, 2005
  7. Just a thought about Japan and currency losses. I think the way the the Japanese government looks at it is the all the money that they have made from the difference in yield over the long run will easily pay for any currency fluctuation. The trade had been highly profitable for many years a the Japanese are quite happy with the trade.
    #47     May 19, 2005
  8. Remember, Japan's "printing presses" created OUT OF THIN AIR 35 TRILLION Yen ($320 billion) during late 2003-early 2004 and bought dollars.
    #48     May 19, 2005