Bond rally nearing an end?

Squeeze of some funds that got short below 107-00 on Friday and yesterday. Now we are starting to downtick a bit again. Bought a few Nov 106 puts for CPI tomorrow on the long-shot that the short covering is done and a high print on ex-food and energy will bring in some renewed selling. Over 200,000 contracts have traded above 107-10 in the 10yr, I think dealers are expressing the same opinion and getting short quite a few.
 
Quote from Lance Carson:

The bullish gap up to 111-15 ( 48.50 yield) WILL BE FILLED. COUNT ON THAT.
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A relatively small gap (in comparison to some of the others the past couple years), but ya, it sits glaring at ya, would be an easy fill if it happened this week...
 
Quote from drsteph:

If that happens, that would be HUGE. Huge. So many people would get caught with their pants down that it would just not be pretty.

Can't fathom it, frankly.
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Isn't that just what the market's supposed to do?

And that email sure sounds scary. Financial weapons of mass destruction...
 
Volatility is getting smoked since CPI since it printed exactly on the money at +.2. Nov 107 straddle in the 10yr options traded 43 pre-CPI and is now trading 28 this morning. Obviously there were worries and now that they are gone we will sit with no data early next week and Fed blackout period. I still don't see how TIPS are at yearly lows in breakeven rates with Poole, the big dove a few weeks ago, now saying "bad things happen when inflation gets out of hand".
 
FOMC on wednesday, should add some light.
The world expects them to hold, but not the Bond market.
If there is the slightest inclination in their summary statement of again raising rates. Watch how much open interest contracts.
My charts say we start making new lows for this decline ... this week.
Cheers!
 
I think that they talk tough but hold stable and do nothing. At least for now (until after the new year).

I've really muscled up on the short end recently. Will kick myself if I should have kept the floaters!
 
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