Bond rally nearing an end?

The German 10Yr finished the week at 116.15 and on a gap up...


We're obviously seeing a short-term rallie, since the long term bias hasn't changed. I hope...:eek:

So where do you see a reversal? At these levels? Above 117?


I trade credit spreads, and i'm almost sure i should have opened the call spread (sell 117/118 and buy 118/119) friday (didn't - fear won over greed)...


Good Trading
Hugo
 
Divergence in the STO 60 min. Prices will go down (ZBU6) to clean up the accumulated stops below 107-04, LOOK OUT BELOW DOWN WE GO!(rallies based on Geopolitical events DON'T LAST TOO LONG) have seen it a thousand times before.


Treasuries benefited from weakness in the stock market...barely. Once again, the long bond market refuses to react to the Mid East crisis or even the stock market plunge. Additional bullish news that seemed to be ignored by the market was a report by the Wall Street Journal highlighting the increase in bond downgrades. According to the WSJ, Standard and Poor’s reports that companies being downgraded to junk status jumped to 5 in the United States throughout the past month. This outweighs the number of those upgraded to investment grade. This is the first occurrence since 2003.
 
FYI, throughout this week's rally, open interest in ZNU6 has decreased between 150,000 and 200,000 contracts.

To me that is people taking shorts off the table until they see CPI and also what Bernanke says.

ZN definitely feels strong now, but that could change very quickly on wednesday, we shall see.
 
To me that's cleaning up the shorts stops before going down again ( may go up a little higher before plunging)

Remember also that the yield differential between Japan (raised for the first time) and US rates have to be at a certain level to finance and attract Asian cash into US bonds. It all depends on what the dollar does from here ( moving up or down depending on Geopolitical events and strength of the US Economy) So the bottom line is the Dollar leads the way for now, while the Mid East Crisis continues or until Helicopter Ben opens his mouth again.
 
The focus has already shifted back to monetary policy. Stocks and bonds are going sideways ahead of Bernanke's testimony; oil and gold are correcting; but gasoline is still making new highs while industrial production data is pointing to a resilient economy.
 
Todays' industrial production number came in much higher than anticipated.

I was expecting for Bernanke to take a pause at the next meeting given current events in the ME, and what seemed like a cooling economy, but today's number really put a dent in my view.

Good trading to all of you !
 
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