Bond rally nearing an end?

thanks mcurto.

Could you tell us, if employment numbers come in way better than expected, wouldn't being short the short side be better than short the 30 yr?

tia...
 
A lot of guys expecting soft (why else would they raise forecasts, have to trap everyone) and a steepening of the curve, thus if the number is better than expected the curve will flatten as it definitely puts the Fed on table for August. On the other hand, a large amount of FHLB paper was being dumped today in the short end, about $5 billion worth, so that is holding it down relative to the long end. Maybe better sale based on that in long end.
 
Well, throw out the ADP report, somebody's getting fired... We're approaching 5.10, I wonder how many are gonna jump in for another test of 5%...
 
The ADP report was an excuse to clean up the accumulated short stops and then change direction. Have seen this many times before.

Long from 105-16, 200 contracts. Target 110-00.
 
interesting. I am long as long as we remain above key levels....



Quote from steveosborne:

Bought 30 yrs put options, betting that bonds are about to resume their downward trend.
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No volume the past two days so wouldn't read too much into the bid. The belly of the curve just caught up to the wings today, so that tells you real money just started to become active, but again nothing huge. Maybe just a short-lived squeeze. Mortgage hedgers rolling 105 calls into the 106 strike, Wells Fargo and Countrywide, about 20,000 total in Sep. Other than that big funds are pretty quiet, looking to get short.
 
Quote from mcurto:

No volume the past two days so wouldn't read too much into the bid. The belly of the curve just caught up to the wings today, so that tells you real money just started to become active, but again nothing huge. Maybe just a short-lived squeeze. Mortgage hedgers rolling 105 calls into the 106 strike, Wells Fargo and Countrywide, about 20,000 total in Sep. Other than that big funds are pretty quiet, looking to get short.
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Everyone seems towant to get short..except one guy I know. This thing may just have a massive short covering rally to 110.
 
It's getting hard to decide which side to be on.

1. I expect the Fed to raise once more to 5.5%. With the 10-yr at 5.09%, I'd rather be short.

2. If the stock market makes a summer decline, as I expect, the flight to quality will drive up bond prices.

3. Maybe 1 and 2 will offset and bonds won't go any where.
 
10-yr seems to find support heading into quarterly expiration - recall the controversy over Pimco's alleged squeeze a few quarters back.

As such, I'm expecting the Ten to find support through early Sep. That should leave us bouncing around 'til then. Of course if equities sell off in earnest heading into Sep/Oct, notes could rally.
 
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