Bond rally nearing an end?

Quote from mcurto:

I wouldn't worry about grasping the trend because some big accounts are on the same side as you. The mortgage servicers bought more than $1 billion of Fannie Mae (mostly 5yr) this week in anticipation of rangebound trade. They got exactly what they wanted today with the market stabilizing around 107-16 in the 10yr and retracing half the move of the morning back to 107-28. Front-month volatility is back under 4% which definitely helps their position because as long as we don't rally back to 109 or higher they won't be worrying about prepayments/refinancing on those mortgages. Definitely some worries out there about stocks (specifically emerging markets) and seems to be some asset allocator type accounts rolling into Treasuries as well. Dealers can afford to sell this stuff though at decent levels because they are still net long around $35 billion. NO numbers next week will be interesting if the funds pile back in long to Treasuries. Anyone have any idea about supply next besides 10yr TIPS? That seems to be the downside risk.
More...

there is no way we will see this rally holding up - maybe 10 more bps to go if other markets remain shaky next week. Then I would definitely be a outright seller if only from fundamental perspective.

Supply till the end of Feb is huge - north of $150bn with additional pressure from hikes in Japan and Europe.

in 2 weeks we have CPI - I believe in elevated reading of core judging from ISM (last month I was wrong on this one though...

The fact that the next week has no data is rather bearish too - it takes sometimes a while before the reality sinks in (check out the gradual impact of an employment report for November). We will get this typical thinking "don't be the last out" with a view of replenishing portfolios at the end of Feb at better rates from auctions.

By the way we still did not have Moskow speech today who finally votes this year. He is one of the smarter guys on Fed board (as opposed to economically uneducated Minehan which was likely the dove in Dec meeting).
 
Quote from daddyeaux:

not sure where this corrects, but it looks as though a housing price collapse can happen if rates really sky....

OK Bernanke, who's gonna sop up this supply?
More...

what do you try to say?
 
Quote from daddyeaux:

not sure where this corrects, but it looks as though a housing price collapse can happen if rates really sky....

OK Bernanke, who's gonna sop up this supply?
More...

let my preface: i'm a housing bear.
is that homes for sale # worthwhile, though? population is much different than in the mid 70s.

stock market cap and volume is also much higher.
 
Quote from scriabinop23:

let my preface: i'm a housing bear.
is that homes for sale # worthwhile, though? population is much different than in the mid 70s.

stock market cap and volume is also much higher.
More...

spot on. Add to this a productivity increase, low rates and there is no reason for anything else than small correction in US housing... we will be out of woods within 6 months.
 
I think the idea here is that a reversion to the mean is still a collapse rather than a "slowdown"

all this a result of the Fed. using a firehose to distribute credit like there's no tomorrow...and there maybe no tomorrow....

if you happen to be a sub prime lender that is.............

an opinion and I could be wrong
 
Quote from dhpar:

spot on. Add to this a productivity increase, low rates and there is no reason for anything else than small correction in US housing... we will be out of woods within 6 months.
More...

i think housing price strength and optimism will be dead for at least a few years, but it seems that barring another 10-25% price correction and the related flack that comes with ARM reset defaults (happy mortgage back security bond holders are in for a good time), things aren't as bad as they seem. if the price of oil holds down, the fed won't need to raise rates AND poor overleveraged ARM homeowners won't be too squeezed [and might be able to afford refinancing], and this year's ARM reset may not be that big of a deal. A large component of the housing boom over the past years was merely an inflationary component.

That being said, I plan on acquiring some rental condos in a few years when no one likes housing and effective yield makes it worthwhile.
 
the point of my posting the graph was to show that nominal for sale numbers are in an economy that is suppose to be booming...

can you guess where the numbers would be if we have a real recession??

leveraged trades started to blow up this week....gold, oil, silver, copper etc....

the Dow didn't like the action either.....

something bigger is happening and the bigger players are headed for the exits...
 
You must log in or register to reply here.
Back
Top