The movement has not been big. The Jun employment report lead to a 40bps decline in the back fed futures. Jul FF is down 5bps, that market is not even giving money away like that last time. Futhermore on the things I'm worried about being wrong employment is not one of them, according to pimco fed usually hikes with 200K NFP reports, and 6 months after the UR peaks. We are a long way from those, I'm more worried about the increase in hours but this looks like mostly noise
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The Credit Crisis Financial Stocks Short Journal
- Thread starter Daal
- Start date
The movement has not been big. The Jun employment report lead to a 40bps decline in the back fed futures. Jul FF is down 5bps, that market is not even giving money away like that last time. Futhermore on the things I'm worried about being wrong employment is not one of them, according to pimco fed usually hikes with 200K NFP reports, and 6 months after the UR peaks. We are a long way from those, I'm more worried about the increase in hours but this looks like mostly noise
The August FF contract that I follow is off 21 points from its 'Dubiai Friday' high. I expect the move will be at least 50-75 points over the coming weeks and then I will reasses how I want to be positioned.
Nobody is saying (well mostly nobody) that this one report presages a hike by the Fed. It doesn't really matter. The long 2 year note trade (or anything related to it) got way crowded and blew off last Friday. Anybody too heavily long is about to see the back hand of god ...
Nobody is saying (well mostly nobody) that this one report presages a hike by the Fed. It doesn't really matter. The long 2 year note trade (or anything related to it) got way crowded and blew off last Friday. Anybody too heavily long is about to see the back hand of god ...
If this is the end of negative NFPs(and thats far from certain), great, all the people who are discouraged and are not looking for work will come back as the media will start cheerleading the jobmarket. UR will jump on that alone(even on positive NFP prints, as opposed to the help it got as people dropping out offset some of the negative NFP prints)
Lets put things in perpective as things stand now the Fed is still far from tightening rates based on employment, even if a few non-voting members keep talking about it, its not the consensus of the FOMC
Lets put things in perpective as things stand now the Fed is still far from tightening rates based on employment, even if a few non-voting members keep talking about it, its not the consensus of the FOMC
Quote from ralph00:
The August FF contract that I follow is off 21 points from its 'Dubiai Friday' high. I expect the move will be at least 50-75 points over the coming weeks and then I will reasses how I want to be positioned.
Thats not your expectation at all. If it where you would be short instead of just talking about it
Again you're more worried about being right or counting heads on the FOMC than making money. None of it matters. If the market gets it into its head that the employment situation is improving, it'll take those GE calls you own down to the single digits in a hearbeat. At that point, you can than make those arugments.
Quote from ralph00:
Again you're more worried about being right or counting heads on the FOMC than making money. None of it matters. If the market gets it into its head that the employment situation is improving, it'll take those GE calls you own down to the single digits in a hearbeat. At that point, you can than make those arugments.
You are like the guy telling Pellegrini to bail out of his CDS. Maybe you forgot calls have limited downside, short-term movements are what dont matter. If I'm right I will cash it, it doesnt matter if my calls go to 1bps at some point. In the other hand trying to TIME movements with a ridiculous bid-ask spread plus commisions like GE options based on short-term guesses is what is almost impossible to do, even if they get lucky every once and a while, I dont believe anyone can do it consistently
By the time the fed hiked rates in 2004 NFP was averaging 174K(including a 338K and 310K print), core CPI was moving up from 1% to almost 2% and the CPI was above 3%. Since this cycle was much worse one could expect a longer lag, I understand the fed balance sheet maybe changes things but the fed will address that through doing what they should do: shrink the balance sheet
GS's Jan Hatizius
http://www.zerohedge.com/article/go...onomic-roadmap-key-risks-and-rate-projections
"*If our economic forecast is broadly correct, the federal funds rate is likely to stay at 0% in 2010 and, more likely than not, in 2011 as well. First, core inflation of 1% or less coupled with unemployment of 10% or more justify very expansionary policies. Second, ârisk managementâ considerations argue for erring on the side of later rate hikes. Third, gradual tightening in fiscal policy and a cessation of Fed asset purchases are likely to substitute forâand hence delayâan increase in the funds rate to some degree."
I agree. I'm still long and I will let others try to time their GE calls paying 4-5bps in bidask spreads plus commissions
http://www.zerohedge.com/article/go...onomic-roadmap-key-risks-and-rate-projections
"*If our economic forecast is broadly correct, the federal funds rate is likely to stay at 0% in 2010 and, more likely than not, in 2011 as well. First, core inflation of 1% or less coupled with unemployment of 10% or more justify very expansionary policies. Second, ârisk managementâ considerations argue for erring on the side of later rate hikes. Third, gradual tightening in fiscal policy and a cessation of Fed asset purchases are likely to substitute forâand hence delayâan increase in the funds rate to some degree."
I agree. I'm still long and I will let others try to time their GE calls paying 4-5bps in bidask spreads plus commissions