Bond rally nearing an end?

I am looking forward to the first 6 months. My personal bet is that we may see very similar pattern to 2006 unless housing sector completely crashes (which is unlikely), i.e. rates up with even deeper inversion than last year.
First 2 weeks will be particularly juicy. There may be some buying pressure from loading bonds in the new year + worry from the upcoming earning season. And we get ISM right on Tuesday - wow - and Bernanke on Friday. Recall, 2006 start was a killer with FOMC minutes right around the new year - and first time 2yr touched Fed funds (I think).
Good luck to everybody...
 
Quote from Lance Carson:

The 4.80 yield will be tested again before the next leg up to 116-00.


As expected , the 4.80 yield will be tested and the Daily Yield gap from 47.79 to 48.00 will be close.
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how low do you guys think we can go today?Im talking about price.

and yields... is 4.70% out of the question today?tomorrow?Maybe the longs right now are about set to hit the panic button.

thoughts?
 
March Bonds: The bonds should find temporary support in the 111-16 to 111-20 range. The market is headed down to 109-110 over the next few weeks
 
Quote from Lance Carson:

March Bonds: The bonds should find temporary support in the 111-16 to 111-20 range. The market is headed down to 109-110 over the next few weeks
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I don't know. Im thinking today the longs have got to be almost ready to hit the panic button.The posters above us discussed the supply issue going into next year very well.

new technical levels today. we shall see....

If I were long bonds (looking for lower yields) I would be very very uncomfortable right now.

blackguard
 
Most downside objectives were pretty close to hit today across the curve. Goldman seemed to be covering size in 10yr futures for some huge fund or their dealer desk, bought back about 10,000 in the pit from 107-31.5 down to 107-27. UBS sold about 15,000 Feb 108 puts in the 10yr from 30 up to 36 ticks, will have to look at open interest to see if this is getting out of long puts (taking profits from around 15 ticks or so) or getting short puts to eventually pin 108 straddles. Countrywide sold 20,000 March 109 calls in the 10yr to buy 10,000 108 calls, pretty bearish when they roll-down calls. They have done this from 110 to 108 and Wells Fargo has followed a similar pattern from 112 and 111 eventually into the 109's. Need more strong housing data and a little turn in PMI to continue this move above 4.66% in cash 10's.
 
So, we got our sell-off as expected.

With 10 Year yields above 4.70%, is it time to cover ahead of tomorrow's number and next weeks event-packed calendar, or do we look for more selling?

thoughts?
 
Quote from islands111:

So, we got our sell-off as expected.

With 10 Year yields above 4.70%, is it time to cover ahead of tomorrow's number and next weeks event-packed calendar, or do we look for more selling?

thoughts?
More...

I think it's telling that we have direction at all this time of year, regardless of volume yada yada, my vote is if you're already in, hold, and if you're still on the sidelines, wait until the new years...
 
Mortgage guys were right aggressively rolling down their call hedge and they have now begun to buy puts, thus momentarily defining the bottom end of the range. This definitely feels like a shakeout of the last group of the former net long base of about 600,000 from E$ out to the 30yr. As of earlier in the week it was under 200,000 and my guess is after today less than 100,000. Real money accounts also seem closer to their bogey (getting back toward neutral vs. benchmarks). If data softens up at all in January (although housing seems to be bottoming) could see some asset allocators shift money out of stocks and back into bonds. Dealer shorts on those Feb 109 calls in the 10yr options should be good for the rest of January till expiration and if Wells Fargo rolls their 150,000 March 109 calls into the 108's might be a low risk sell on the Feb 108 calls as well.
 
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