Bond rally nearing an end?

Quote from johnpinochet:

This has got to be the most unusual day I've seen in months.

Spike up to 113 10. Then down to 112 03. Then all the way back up to 113 09.

Any ideas/comments?
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Watch her go all the way back down too.
 
The 30yr cash roll into the new issue is -11.5 basis points, so obviously huge demand there, hence the solid rally in 30's and nothing going on in ten year to upside. Also hearing a massive unwind of a 5yr-30yr swaptions steepener, so probably somehow flowing back into the 30yrs today.
 
I have 4.62% on the 30yr as about a 38% retracement level of the recent move that ended monday, and a normal pullback area. Think we were all expecting something like this...
 
Definitely some very large hedge funds that put bet on that 10Y/30Y curve would steepen and its flattening massively. They are getting screwed on all hedges as well. Have to pay up in 30yr futures. And dealers hedging when issued so huge volume spike.
 
Quote from mcurto:

Definitely some very large hedge funds that put bet on that 10Y/30Y curve would steepen and its flattening massively. They are getting screwed on all hedges as well. Have to pay up in 30yr futures. And dealers hedging when issued so huge volume spike.
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I just checked the hourly chart, big buying today, guess that's why. I see two support levels, the first being touched today: 4.62% and next at 4.57%. If the buying panic subsides, maybe a tick or two higher on monday. If not, another push to washout the shorts.
 

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Looks like we are going to have to seriously invert as the Fed fights asset prices and Bernanke re establishes Fed cred.

Then look for the massive steepening play to go to work.

(I have a 2-10 steepening position on in a paper trading account. When it starts showing me convincing green it will be time to pile in. So glad I didn't attempt this position too early!)
 
Spreads are not my forte. But it sounds like a reasonable plan.

Rates will be rising across the longer end of the curve, not so sure at this point about the short end. It has already had a major runup all on its own. Actually I would not be surprised to see them start pulling back soon.

The 10yr and 30yr are now both in bear markets. Todays volatility and rally in the 30yr I don't believe changed a thing. Short term corrections to overall trends can be swift, and just as quickly reversed.
 
Took a good look at the 30yr over the weekend.
Should be massive resistance at 113.23 should it venture that high. I see the 10yr was down today, and the spread is now less than 80 basis points.

tony
 
Hello,

What is the normal spread for the 10-year and the 30-year?

How do you trade the spread. I am new to bond trading, and I am looking to expand my knowledge. So for I am doing pretty well with just technical signals, but understanding more fundamental factors could be helpful.

Regards
Steve
 
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