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Bonds ready to rally?
- Thread starter steveosborne
- Start date
I'm back.
I still see 10 year notes moving from 109 to 114 but I won't try to hide the fact that my timing was bad. I now see the catalyst to be next week's FOMC meeting, something that would be much more typical with bonds.
I still see 10 year notes moving from 109 to 114 but I won't try to hide the fact that my timing was bad. I now see the catalyst to be next week's FOMC meeting, something that would be much more typical with bonds.
Quote from steveosborne:
I'm back.
I still see 10 year notes moving from 109 to 114 but I won't try to hide the fact that my timing was bad. I now see the catalyst to be next week's FOMC meeting, something that would be much more typical with bonds.
Shouldn't it be more of the same at the meeting, increases at measured pace, inflation a risk to the economy, blah blah blah... i doubt there's gonna be little language in there to turn things around no?
I agree with your reasoning but I put exceptional weight on those meetings because of the way they have influenced short term trends in the past -- especially recently (May 3, June 29/30 and Aug 9) at times when Fed communication didn't contain anything new. Another reason is the build up of signals I'm getting.Quote from landboy:
Shouldn't it be more of the same at the meeting, increases at measured pace, inflation a risk to the economy, blah blah blah... i doubt there's gonna be little language in there to turn things around no?
I thought a month ago that bonds were about to shoot up because of bullish signals coming out from 10 Yr Note prices but since then, those signals became stronger and, more importantly, are now confirmed by similar signals extracted from 5 Yr Note and 30 Yr Bond prices. It was a mistake to prematuraly use a good but unconfirmed indicator.
A bounce is overdue soon for 10-30yrs, theyre very very oversold, the question is will we break the june 3rd highs?
Many bond bulls just turned bearish here, some of them don't even think well go back anywhere near the sep 1st top.
The fundamental picture not pretty, yet even if the inflation scenario pans out, we might still get a few weeks bounce to squeeze the shorts to later resume this apparent bear wave.
Lots of bond bulls have capitulation levels at 4.6-4.7% for 10yrs 4.8-49% for 30s
Capitulation=Bottom?
Many bond bulls just turned bearish here, some of them don't even think well go back anywhere near the sep 1st top.
The fundamental picture not pretty, yet even if the inflation scenario pans out, we might still get a few weeks bounce to squeeze the shorts to later resume this apparent bear wave.
Lots of bond bulls have capitulation levels at 4.6-4.7% for 10yrs 4.8-49% for 30s
Capitulation=Bottom?
My Sequential indicator has not triggered a BUY signal across every timeframe yet in the 10 or 30. Although we are overdue for a pop, my system indicates we have another leg down. This indicator is a very accurate measure of overbought/sold conditions.
Take a look at the yield chart, we need to close below 4.76 on the 30 Year Yield to sustain any kind of meaningful rally in price.
I have been painfully been trading from the long side this week.
Take a look at the yield chart, we need to close below 4.76 on the 30 Year Yield to sustain any kind of meaningful rally in price.
I have been painfully been trading from the long side this week.
Quote from steveosborne:
I agree with your reasoning but I put exceptional weight on those meetings because of the way they have influenced short term trends in the past -- especially recently (May 3, June 29/30 and Aug 9) at times when Fed communication didn't contain anything new. Another reason is the build up of signals I'm getting.
I thought a month ago that bonds were about to shoot up because of bullish signals coming out from 10 Yr Note prices but since then, those signals became stronger and, more importantly, are now confirmed by similar signals extracted from 5 Yr Note and 30 Yr Bond prices. It was a mistake to prematuraly use a good but unconfirmed indicator.
Interesting, I'm never one to catch a falling knife, which I suspect is what may be the case here. Picking bottoms in bond prices could be dangerous this time around especially with the "I" word being bounced around. However, I read an article today saying Bernanke may hold off on rate increases after he comes to office in 06 due to a slowing eco... according to Bill Gross. I hope you're right steve, I'm waiting for a buy signal too...
I still have a price target of 113/114, and I think that what is going on now is some kind of exhaustion with Fridayâs unemployment report as the last opportunity for bears to play their cards IF they have any left. I have very little problems playing trend reversals in stock prices but have to admit that itâs much more difficult with the bond market that seems to be governed by very different constraints. Risk aversion is much stronger in the bond market where trend reversals seem to depend, on occasions, on total exhaustion of the current trend before a new trend or a correction can take place. Reversals, in the absence of shocks or major surprises, seem to be a much longer and flatter process with bonds while the stock market can turn on a dime without anything special happening in the economy.