Heinz on Treasuries
tfc-charts.w2d.com
Date: Tue Apr 06 2004 10:20
trotsky (Aurum@10-year note chart) ID#377387:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
in reality, the 1998 high has been left in the dust long ago. the chart you've been looking at is an 'unadjusted chart' - i.e., when the benchmark securities for the bond and note futures contracts were changed ( to nominally lower yielding, 'younger' bonds and notes ) the makers of this chart drew in a big decline. however, that long black candle at the end of '99 DOES NOT EXIST in reality.
the reality is that both bonds and notes are barely off multi-decade highs, while sporting a huge speculative short position. as i've said before, i've never before seen a market barely off multi-decade highs so infested with bears. as i've mentioned yesterday, in Rydex bond short positions exceed long positions by a factor of 23...in the 10-year note meanwhile, specs are short over 100,000 contracts net.
one thing is imo certain: that's NOT how secular bear markets start. on the contrary, the above is a very strong indication that the secular bull market in bonds is far from over. of course no-one knows for certain how much longer it will last, but it could be YEARS before it's over, and we could yet see yields no-one ever dreamed of seeing.
Date: Tue Apr 06 2004 10:30
trotsky (Aurum, more on bonds) ID#377387:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
one must also consider that it's very early in the deflationary K-winter. in Japan, long term yields fell from over 8% to well BELOW 1% in the space of 12 years during their K-winter. if i had a penny for every time the top of the Japanese bond market has been called during this period i could probably retire on my own island.
the same will imo prove true for the US bond market - last year e.g., international fund managers reduced their exposure to US bonds by one third of their assets previously so invested, or by almost 1 trillion dollars. and yet, the market barely budged...this is a sign of great inherent strength, and it is to be expected that the money that rushed out will rush back in as soon as the current emerging market and junk bond bubbles burst once again.
imo currently, the commodities markets look far more vulnerable to a correction than the US bond market, since everybody and his auntie is now long commodities. |
