Bond Trader 2009 - War Stories for 18 March 2009

For future reference from the WSJ:

Fed in Bond-Buying Binge to Spur Growth
Dramatic Plan to Purchase $300 Billion in Treasurys Causes Biggest Drop in Interest Rates Since '87; Perils of Printing Money
By JON HILSENRATH

"""
Prices on Treasury debt soared, pushing the yield on 10-year Treasury notes down to 2.53% from above 3% the day before -- the largest one-day drop since the aftermath of the 1987 market crash. The rate on a 30-year fixed-rate mortgage for credit-worthy borrowers fell to about 4.75%. But the value of the dollar sank, a reminder of the risk the Fed is running by printing money to give the economy a jolt.
"""
http://online.wsj.com/article/SB123739788518173569.html?mod=rss_Today's_Most_Popular
 
I guess I don't understand. You know you shouldn't have been trading with the announcement coming out, yet you did and got your ass handed to you. If you had any cash left, there were some reentries available to get long again, I even took a short at one point and caught a reasonable profit.
You know what you did wrong, so don't do it again. Why give up trading if you were doing so well? You broke your rules and learned. Do you quit every job after you make a mistake and the boss reems you a new one? Not trying to be harsh, but hate to see you quit because you took one bad trade and you know you were wrong. Learn and prosper!
Good luck, actually a bad phrase for anything you take seriously. It should be work and study and you will be rewarded.
 
Quote from johnpinochet:

You can say that again.

I wonder if the Fed had the eventual close of the 30 year and 10 year yesterday within their calculations of possible scenarios. Specifically I would love to have seen the various slides presented to Bernanke regarding probabilities of various outcomes. I'm going to make a wild guess and say that even they didt not expect yesterday's result or at the very least it was far down the list of expected outcomes, all in one day.
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I think they not only expected the curve to move the way it did, they really wanted it to happen. The monetary policy value of shocking the market has been demonstrated by both the SNB and the BoE. The Fed wanted to take the market by surprise and they did it.

However, it's important to not screw up the communication and not to confuse the mkt, while shocking it. That's what they managed to get completely wrong and I expect some people are unhappy about that.
 
I'm surprised at the lack of volatility today. I guess the only thing that will move this is whether the power is cut off to the printing press.
 
All I have to say is anybody that had a position coming into the FOMC announcement that got steamrolled deserves what they got!

I have been trading ZB for a while and NEVER have a position on FED day, I do trade the monster after the initial spike(s).

Thanks for the thread JP!
 
Quote from Surdo:

All I have to say is anybody that had a position coming into the FOMC announcement that got steamrolled deserves what they got!

I have been trading ZB for a while and NEVER have a position on FED day, I do trade the monster after the initial spike(s).

Thanks for the thread JP!
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Agreed. The explosive potential is always there.
 
Quote from Surdo:

All I have to say is anybody that had a position coming into the FOMC announcement that got steamrolled deserves what they got!

I have been trading ZB for a while and NEVER have a position on FED day, I do trade the monster after the initial spike(s).

Thanks for the thread JP!
More...

What if one forgot that there is FOMC announcement comming? Just a hypothetical question. Who would do that?
 
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