All Clowns Must Be Destroyed Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : All Clowns Must Be Destroyed

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: NickSE who wrote (6783)	2/3/2000 10:10:00 PM
From: NickSE	Read Replies (2) of 42523

US Credit Review: Bonds up 2 pts; more talk of bad positions news.bridge.com New York--Feb 3--The bellwether bond surged 2 points in a wild session reminiscent of the 1998 financial market crisis. Rumors of institutions hit with losses on bad positions ran rampant and led to fears of systemic risk, until the New York Federal Reserve calmed the market by denying talk that an emergency meeting to deal with the situation had been called. "We changed from a yield curve squeeze at the long end into a major credit event in the middle of today when all the rumors reached their peak," said Patrick Dimick, an economist at Warburg Dillon Read. "It was definitely reminiscent of the 1998 fear trade that we had systemic risk in the financial system." The rumors ran from a general unwinding of bad positions to talk that specific parties had recorded million-dollar losses on trades involving short positions in bonds, and included institutions ranging from dealer desks to hedge funds to money managers. Players tied the bad positions to the recent unexpectedly strong performance of the bond versus the rest of the yield curve. Further, players said those participants who had bought off-the-run bonds versus selling the bellwether bond in anticipation of significant Treasury buyback were disappointed the Treasury suggested Wednesday its initial buybacks would be modest in size. "The thing you shorted is rallying like crazy because you've just (essentially) been told that long bonds are going away and Treasury is not going to be buying as soon or as intensely as you had been betting; that's where most of the speculators are suffering pain," Dimick said. "A lot of money is being lost." Market participants have seized on a comment made Wednesday by Treasury Undersecretary Gary Gensler that the 10-year note could become the benchmark US security. Treasury "really, really put the long end on notice there are not going to be many more bonds," a coupon trader said. "That's caused a disruption in capital." But "when the market moves like this, it's a function of speculators on the wrong side of the trade." [...]

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next