Bond Futures

[zboy2854A]

Quote from trader99:



Yield curve is SO NOT inverted now. It's normal and upward sloping. We haven't had an inverted yield curve in well over decade or more. We might had a little hump here and there, but definitely not inverted.

also, what you are talking about stocks and bonds running up together has nothing to do with curve inversion. that's a different phenomenon.

do you even trade bond futures?

just curious...

First, we had an inverted yield curve in 2000, I don't know what you're talking about that we didn't have one in over a decade. Second, yes, I misspoke about the inversion right now. I was looking at an old cached page that had old data on it for the shorter term maturities, and I don't normally deal with the short term ones. My bad.

Also, I never said stocks and bonds running up concurrently had anything to do with curve inversion, I mentioned it as another consideration in future price movement of bonds.

 

[zboy2854A]

Quote from Point Man:


From Point Man

Sorry old boy, but traditionally, bonds and stocks move in line with each other. The phrase 'Flight to Quality' came into play after the Crash of 1987. After which stocks and bonds moved in line again with each other. It has only been the past 3 years that bonds and stocks have moved in the inverse and that has not been the case the last 3-4 months.

Let me ask you this. If the stock market crashed tomorrow (NOT because of terrorism), what do you think would happen to bonds?

 

[malcom x]

of course initially securities move higher in a crash. suppose the dollar weakening is the cause of the crash-flight from dollar to euro's. bonds would sell off like you have never seen.

 

[zboy2854A]

True. It's probably not a good idea to talk in generalizations, as there is always a scenario in which this or that could happen. In the current situation, however, it seems to me that the next substantial move downward in the stock market will not be accompanied by bonds moving down in any meaningful way. There may be some retracement, but bonds are clearly still in a bull market, while the stock market is still in a secular bear, and the fact that bonds continued strongly after the stock market transitioned from a bull market to bear in 2000 illustrates exactly the divergence I'm referring to.

 

[trader99]

Quote from zboy2854A:

True. It's probably not a good idea to talk in generalizations, as there is always a scenario in which this or that could happen. In the current situation, however, it seems to me that the next substantial move downward in the stock market will not be accompanied by bonds moving down in any meaningful way. There may be some retracement, but bonds are clearly still in a bull market, while the stock market is still in a secular bear, and the fact that bonds continued strongly after the stock market transitioned from a bull market to bear in 2000 illustrates exactly the divergence I'm referring to.

zboy,

that kind of analysis makes a LOT OF sense actually.

but what i was picking on was the use of the word "inverted yield curve" which has very specific meaning and has nothing to do with divergence between bonds and stocks movement or comovement or cointegration.

99

 

[zboy2854A]

You're right, my mistake. No inversion currently. But I swear I just saw something recent that mentioned a short term yield that was higher than a longer term maturity. I'll have to try and dig up where I saw it.

 

[Point Man]

Quote from zboy2854A:

You're right, my mistake. No inversion currently. But I swear I just saw something recent that mentioned a short term yield that was higher than a longer term maturity. I'll have to try and dig up where I saw it.

You are digging an even deeper hole for yourself. One thing I do like about your style and I mean this as a compliment. You cut your losses well. What do you trade?

 

[Dr. Zhivodka]

Quote from zboy2854A:

You're right, my mistake. No inversion currently. But I swear I just saw something recent that mentioned a short term yield that was higher than a longer term maturity. I'll have to try and dig up where I saw it.

Shouldn't there be some sort of minimum market knowledge test required to be moderator?




Dr. Zhivodka


BTW: short USU3 from last Tuesday @122.00

 

[Point Man]

Quote from Dr. Zhivodka:




Shouldn't there be some sort of minimum market knowledge test required to be moderator?




Dr. Zhivodka


BTW: short USU3 from last Tuesday @122.00

It is not a profit until you take it. I want to be long 11705-11616.

 

[zboy2854A]

Quote from Point Man:



You are digging an even deeper hole for yourself. One thing I do like about your style and I mean this as a compliment. You cut your losses well. What do you trade?

As far as bonds go, I'm only trading the 30 year T-bond. I'm admittedly much better versed in the world of equities and options, but I use my well honed chart reading and stop management skills to good effect so far in the bond world. Right now I'm just sitting and waiting for one of the two price movements I mentioned before taking another position, but so far I've done really well in the bond futures market...