and an explosive move it was..... one day off not so bad , PTJ was bout 4 months off on the famous 1987 call....
For what it is worth I think we are due an explosion. So far this year the fx markets have been very choppy but stuck in a fairly tight range - this means when the break out comes it will be brutal. Despite Greenspan's claim in late 2004 that anyone who isn't positioned for higher rates must be prepared to lose money, bond yields are lower. If this continues much longer there will be an evil squeeze of all the stale shorts. The figures in Japan, the US and Europe over the past month have been awful. At the moment it is just a 'soft patch' - if it goes on any longer then cuts will become on the agenda. I am not saying that will happen but it is the danger. Thankfully I trade very short term (apart from a stategic short dollar/long HK$ position as it is near the top of the band and the funding cost is very cheap) but I certainly know continued weak data could cause mayhem similar to the LTCM debacle.
Like I said yesterday . . . The huge premium in the June S&P contract at the close of the pit traded session was a pretty decent "tip-off". Hope everyone did well today.
Right here, right now baby. Ring the register and switch sides. Just like they were too bearish at 4.6%, they're too bullish at 4.1%.
Treasury market is acting very much like the stock market's response to Greenspan's famous "irrational exuberance" speech. That is-- they are ignoring the Chairman's warnings about being overly-exposed to duration. It took, what, six years before the stock market finally appreciated AG's warning of irrational exuberance. At the same rate, it won't be until late 2010 before Treasury investors act on the notion of "secularly" higher yields. Hmmm.. just about at the time the bulk of boomers are ready to retire. Is it really a generational/demographic thing? Hmmm..