Bond rally nearing an end?

[steveosborne]

We had very low volume, with price action indicating that buyers staid on the sidelines.

The 30 yr went straight down from 8:00 to 9:55 (CT) and then closed shop for the day.
<img src="http://www.elitetrader.com/vB/attachment.php?s=&postid=1056605"/>

 

[gharghur2]

yup! except to put it that new low at 2 o'clock

 

[steveosborne]

while everybody was sleeping

and then it went right back into its small trading range

 

[gharghur2]

probably nobody noticed except the NQ pit

 

[steveosborne]

Quote from steveosborne 04-26-06 03:33 PM:

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

Stocks dipped again after bonds closed -- another indication of a substitution effect taking place during the day between bonds and stocks in favor of the latter.

 

[gharghur2]

Selling bonds to buy stocks?
And, when the bond market closes, sell stocks ...

 

[steveosborne]

It means they stopped selling bonds to buy stocks because the pit is closed.

 

[gharghur2]

And when they stopped selling bonds to buy stocks.
The buying dried up in the stock market and the futures pits took it down. That's what I'm seeing

 

[steveosborne]

Exactly, and the bonds-stocks substitution effect could explain part of the difference you detected between cash and futures.

 

[mcurto]

I believe Bernanke made a comment around 2:30pm that the market misinterpreted his readying for a pause last week. Watch out, Lehman putting out high ball Fed Fund prints again their Economist out on the wires today saying 5.50% in Fed Funds and the exact same thing, that "market misinterpreted" his statement.