Bond rally nearing an end?
- Thread starter gharghur2
- Start date
U.S. Treasury bonds rallied to a sharply higher close Thursday, pressing yields lower, after news that law enforcement authorities in London may be bracing for a terror attack over the holidays.
http://www.marketwatch.com/news/sto...x?guid={A6800BB8-A1BD-4CF1-9870-E99F789DB33B}
Not necessarily the reason, but that's the excuse.
Does anyone realize that Lacker was quite hawkish? He said Fed still worried about inflation data and growth was back toward 3%. Still not pushing any type of cut. Anyway, Wells Fargo is buying size in the March 109 puts (in the money) about 7,500 from 1-12 to 1-14. Option locals selling size in futures into the lows to hedge . . .
Well, he was and he wasn't - depends what you want to hear. One thing is certain: almost all of the speech was devoted to housing + he mentioned downside risk to it. That was relatively atypical for him. At the same time he mentioned inflation only briefly at the end - but that's where a lot of people stop reading (so comfortably
Market could be cheapening things ahead of next weekâs $33 billion in supply which may require dealers to hold some inventory. The Treasury calendar gets really interesting from mid-Jan. through the Feb. auction of 30s, with $150 bil in supply all across the curve. Do the Asian CBs keep buying, or do they roll the proceeds from maturing issues into Bunds? (I keep reading how they are bearish on USD.)
the Fed has elected at least one pot plant to talk inflation since any deflation or recession talk takes the Dollar index from 8300 to 7800 and puts a foot up the mud pipes on Wall Street
we're past bonus season so fingers are on the trigger,
GOOG from $400 to $350...canary in the coal mine
we're past bonus season so fingers are on the trigger,
GOOG from $400 to $350...canary in the coal mine
John I definitely agree with you, tons of supply as we get into 2007. Last year was a bit nuts in the first three months as most of the Asian accounts were dumping Treasuries ahead of their fiscal year-end. Furthermore at this time last year inflation was just beginning to trend higher whereas now it is seemingly making a top (or at least these same accounts think so). At least from what I am seeing at the CBOT, one of the HUGE asian accounts sold 45,000 March 104.5 puts in the 5yr options about two weeks ago. This is probably saying that any fiscal year-end selling of current maturities by the Asians will just be met by them rolling into the next available issue, whether it be Treasuries, Agencies, MBS, and even Corporates (even with all at super narrow spreads). They definitely aren't allowing for really any downside with that trade and only collecting 8 ticks in premium three months out.