Anyone trade bonds from a longer term perspective/fundamental, and care to comment on today's move? Temporary reaction or beginning of a more pronounced up-move in your opinion... Thanks...
Everyone has been selling the market, and talking about how rates will ONLY go higher over the course of this year, and how the FED will have to raise rates in order to cap the inflationary fears that we are starting to see from 8% GDP growth and gold, silver, beans, and crude oil going thru the roof. Yet, I still feel that DEFLATION is looming large out there. Just take a look at the collapse in M3 since mid-August! Another point higher ( 112.16 ) and you get a break-out on the chart and a chance for a much bigger push higher in prices.
Waggie, whre do you get your M3 data? and what does its collapese have to do with deflation? I too think bonds are going to retest the June highs, big surprise? . .. Now what are stocks going to do?
Waggie, I haven't been tracking money supply so I'm interested in hearing your thoughts. From what I understand: M3 = M2 + CD's (or other large time deposits) + Money Market + Term Repos + Eurodollars. So, just out of curiosity, couldn't a shrinking M3 just reflect a shift from the sidelines into the equity market melt-up as people liquidate money market and CD positions? Off hand, do you know how the size of tradeable debt is growing (aggregate of treasuries)? Another thing that would factor into this is the level of US treasuries being held as reserves by foreign central banks -- do you know if they are net buyers or sellers of US debt at the moment? Thanks.....
deflation was bad for gold ? gold is at new multi yr highs this past week perhaps the dollar weakness will stop and gold will go lower and yields will come in all at once ??
Yeah, my guess is that we're in the early stages of reflation...although I am interested to hear waggie's perspective on the money supply though. However, I am also curious whether M3 declined b/c people were coming off the sidelines and finally putting their capital to work in assets that aren't measured by the money supply (equities, capital spending, etc.). That would seem to make sense to me....
If your barber tells you that the Fed has to raise interest rates soon, well then maybe it is time to go long bonds??!!
That's the amazing thing. With a backdrop of soaring commodity prices and supposed prospects for economic "growth", bonds should be plummeting instead of breaking out. And yet here we are near a multi-month low on 10-yr yields, with the majority of market players leaning the wrong way (read: much more room to go). If it's a call between equities and bonds, I'd trust the latter much more than the former.