If that wasn't the TOP we're very close to it.
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Bond rally nearing an end?
- Thread starter gharghur2
- Start date
Not me ... still watching the 2yr for the signal.
Quote from rjmain:
So because this yield curve is beyond screwed up, does anyone have any theories on whether the fed is going to come to the bond market or the bond market come to the fed by letting the yield curve normalize.
PS. I am one of those idiots who is short long bonds
Personally I am of the feeling that we will the latter. The problem is we are STILL above the Fed's tolerence for targeted inflation, even with the slide the past couple months. I still think the fed is leaning hawkish, and as long as there is no serious indication the economy is about to fall apart I think a pullback would need to be in order to get to where the fed is...
BTW, trust me I totally feel your situation, you don't know how many times I've been squeezed outta my position... I just got lucky this time.
Massive mortgage call buying and convexity-type bid in cash 10s and futures. 2yr finally caught up this afternoon on the rally and steepened the curve quite a bit. I think the mortgages are moving into March options as Dec is becoming more influenced by volatility as it gets closer to front month. They bought nearly 35,000 March 109 calls outright for Countrywide while Wells Fargo rolled calls from Dec 108 and 109 into the March 109 and 110. Flows will take over below this 4.65% yield in cash 10s, because the move to 5.25% started here, so convexity buyers will get dragged in and maybe take us another 5-10 basis points lower in yield.
Sounds like they are all getting convinced that rates will stay we're that at or head lower.
TOP is close at hand!
TOP is close at hand!
Quote from mcurto:
Massive mortgage call buying and convexity-type bid in cash 10s and futures. 2yr finally caught up this afternoon on the rally and steepened the curve quite a bit. I think the mortgages are moving into March options as Dec is becoming more influenced by volatility as it gets closer to front month. They bought nearly 35,000 March 109 calls outright for Countrywide while Wells Fargo rolled calls from Dec 108 and 109 into the March 109 and 110. Flows will take over below this 4.65% yield in cash 10s, because the move to 5.25% started here, so convexity buyers will get dragged in and maybe take us another 5-10 basis points lower in yield.
I knew the mortgage guys would eventually come in... Thanks for the update...