James, the US Bond market is experiencing some of the highest volatility in several years over the past 6 weeks
or so, the 10 year note has been been really skipping around look how we went from 4.66 to 5.03 in yield
over just the past 2 and a half days. the March TBOND contract fell 77 ticks on Wed.
64 ticks is 2 FULL Points
stockcharts.com[w,a]daclyymy[pb50!b200!b21!i][vc60][iUb14!La12,26,9]
I did this chart 2 nights ago and we are already back to the 200 dma and the major green downtrend line.!!!!
tempjohnp.netfirms.com
(if that direct link does not work go to this url and try using the hyperlink)
tempjohnp.netfirms.com
you have to go back to the Aug to Oct period of 1998 to see this type of volatility. The market was looking at
the end of the easing cycle prior to time it became obvious that of ENE would go into bankruptcy.
Now we also are seeing the Argentina situation is really slipping as the IMF is not releasing a Payment to
Argentina later this month, I'll post that in a few minutes.
The cross currents in the global US and the global economy are very profound in my opinion. Equity bubbles
unwinding, weak commodities, huge monetary stimulus, Japan's economy in the worst downturn since WW II
with Q3 GDP contracting .5%
you gotta love this commentary from Wednesday afternoons briefing comments:
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Treasury Summary: Rough day in the markets today, as it seemed like Dean Wermer put the market on double secret probation... "Mr. Blutarski... zero... point... zero, the lowest grade point average in Faber College history." So, what did the stock markets do in response? They had a big old toga party. It was that severe dichotomy that we would see in the market today as Treasuries took it on the chin while stocks would break through major psychological barriers.
With the market weak overnight on comments out of Cisco, Oracle and chip makers, which spurred global stock strength and profit taking in 2s through 10s by London and Tokyo accounts, we would see the curve get distinctly softer. Some better selling in early NY trading was seen as domestic equity futures pointed to a higher opening. This, coupled with thoughts that convexity trades were being unwound, and Russia announcing that they would cut production by 150K bpd, led to a bias higher in yield that would hold for the remainder of the session.
NAPM Services was released at 10 ET, and with the market expecting a print of 43.0, the headline read of 51.3 would be a hefty surprise. Some looked at the new orders component , which rose 48.3. Others focused on the employment component instead, which, while under 50.0 (indicating a decline) it was consistent with recent data that shows that the economy is not improving, rather beginning to stabilize. But regardless of which component was paid attention to, the data added a good deal of the color surrounding the decline in Treasury prices.
One trader wisely summed up his take on the market today by telling us that there is frequently a re-adjustment of positions a couple of days ahead of the non-farm payrolls data. And this, combined with year-end lack of liquidity, a Dow that broke 10K, a Nasdaq that broke 2K, and a NAPM services number that surprised to the upside, led the market to perhaps shift its expectations of the report, and subsequent portfolio positioning.
The 2/30 spread flattened to 230.7 bp at the time of the futures close at 15 ET from 242.7 bp late Tuesday.
March T-bonds closed 77 ticks lower at 102-19, 10-years closed 58 ticks lower at 105-26. |
