Wednesday, November 26, 2008


In light of the events in the FIXED income world
We need to reset our concept of possible lows in Bonds

today's lows are

The corresponding APs
TNX 3.05 first Decennial low , 2.51 First ALAP and 2.05 Second Decennial low AP
TYX 3.50 Second ALAP, 3.14 Third ALAP and 3.05 Decennial

Now, we are still at a support here, but any significant lows below these will call the next set of APs to come into support role. Frankly, it is hard to tell if these levels hold. TYX has bounced pretty nice from this 3.50 level, but the TNX has gone through too much( almost). So, it is a trade time to feel this spot out. Considering the markets moved higher today. Only explanation of the Bonds Moving higher is that Money confiscated from us is used to buy the BONDS by our own government. It matters none though for our purposes. Fact is we are where we are. Considering where the stocks market is, perhaps the bonds are anticipating another reasonably steep decline coming? It is all possible, that is what makes the need for a trader even when one thinks we are dealing with the Longer Term Asset Allocation. All Long Terms start from the short term. I will take a deeper look and report if there are any timing reasons for the Rates to reverse here.


D said...

It would be far cheaper for them to pump equities than the bond market. This would allow them to dump equity inventory they recently acquired too.

John said...


Agree with the possible steep decline, I am just remembering the way the YBR looked. Very , very jagged.

old john

Vin said...

Perhaps we'll see it begin around the nearby power date and end at the next big YBR bottom?

I have a feeling that we'll be hearing about a surprising number of shoppers hitting stores at the crack of dawn on Black Friday. With the thin holiday volume, such news might significantly affect the markets. We shall see!

cobbense said...

You are good at many things, Boris.
Hard to cover everything.

One more unpleasant interpretation of this could be as just another move along the road to rule by decree.

"The 10 year treasury is flirting with the 3.00 percent level again. Participants view the Federal Reserve announcement yesterday as motivation and impetus for a huge curve flattening trade which is underway as we speak.

Here is some of the logic.

. . .

Succinctly stated, you have natural buyers and natural sellers of sectors of the curve. In conjunction with an anchored funds rate the flattening process which is underway should continue and probably with 10 year notes and 30 year bond yields plumbing regions one would have thought unthinkable."

boris said...

Dear D,
Dear JOhn
Dear Vin,
Dear Cobbense,

Thank yo all for your comments on this day of ThanksGiving.

Insightful as always.
Good Trading to all of you

אנטי-סופיטליסט said...

Dear Boris,
As always thanks for your insights
into the world of finance.
There are some new ULTRA(2X) ETf's that have been introduced:

Good trading.