Bond rally nearing an end?

[steveosborne]

Quote from steveosborne:

<font color=blue>Real estate is cooling</font>; only 3 out of 12 districts reported solid growth; producers have difficulty passing on higher costs to consumers; <font color=blue>but the manufacturing sector is still strong.</font>

Another thing I made sure to mention is that while the manufacturing sector is still strong, we have at the other end of the economic circuit real estate cooling down. Janet yellen elaborates a lot on the various causes and effects to growth and inflation and from what I was able to understand she clearly sees higher real estate and higher borrowing capacity as the initial impulse to a series of transactions that eventually lead to limited production capacity. Our capacity utilization and our needs for productive resources have reached a dangerous level but the initial cause of all that is not feeding the system anymore like it was.

She is also aware that global growth is picking up and will contribute to demand for manufactured goods.

 

[gharghur2]

Kind of cross currents there:

G-7 talking down the Dollar
BB wanting the Dollar to hold steady.
Interesting outcome?

 

[steveosborne]

Yes, the G-7 commitments have added to uncertainties.

 

[steveosborne]

Quote from gharghur2:

Thus, far the committment has been down or no response.

The 10 Yr response was neutral while the 30 Yr's was a tiny winnie bit positive.

 

[gharghur2]

And stocks got bored and gave back much of their rally from this morning too. Seems like some are lightening up or just watching.

 

[riskarb]

We had a slight bump in vols last week due to the inflation numbers. I wanted to get short deltas/gammas at the 107 strike in USM6, but waited until we traded below that handle and now long delta. Fairly confident we trade in a 106-108 range for a time. Sold 6.9% vols on the June 107 synthetic combo.

 

[Johnny Walker]

BB wants the dollar decline to be very orderly, last thing he wants or we need is a dollar crisis.

 

[WAWTU31]

Quote from riskarb:



I wanted to get short deltas/gammas at the 107 strike in USM6, but waited until we traded below that handle.

Sold 6.9% vols on the June 107 synthetic combo.

Riskarb, that sounds like a pretty complicated trade if you dont mind me asking, what online broker allows these types of transactions? and on the the synthetics that you sold at 6.9% can you explain that strategy

 

[steveosborne]

Quote from gharghur2:

And stocks got bored and gave back much of their rally from this morning too. Seems like some are lightening up or just watching.

They dipped right after 3:00 when bonds closed. Does it mean that before that money was flowing from bonds to stocks?

 

[riskarb]

Quote from WAWTU31:

Riskarb, that sounds like a pretty complicated trade if you dont mind me asking, what online broker allows these types of transactions? and on the the synthetics that you sold at 6.9% can you explain that strategy

Sorry for being vague -- I sold futures/sold 107p, 1x2. It's equivalent to a 107 straddle. I sold some US-pit through a Euro-bank and some e-cbot ZB's with IB.

I like to trade the synthetic over the natural straddle since it allows me to trade deltas against the position around the clock w/o an active options market.