A quiet day is shattered in the Treasury market, the long bond diving more than a full point...


A quiet day is shattered in the Treasury market, the long bond diving more than a full point over the last 90 minutes, retracing about half of its big weekly gain. The yield pops 5.4 bps to 3.33%, the yield on the 10-year +4.7 bps to 2.21%. TLT -1.5%,TBT +2.8%.

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Comments (15)
  • winningtrader
    , contributor
    Comments (2459) | Send Message
     
    Well, over the last one year the FED has bought approximately 2/3 of all new treasuries. People at the FED are talking about no more QE. Of course, they are just joking but if they keep saying things like that they may get more than they bargain for and the treasury market can really drop.
    30 Mar 2012, 03:15 PM Reply Like
  • American in Paris
    , contributor
    Comments (5495) | Send Message
     
    New Treasuries is not the right metric. Total Treasuries traded both in the primary and secondary markets is the right metric.

     

    You are exaggerating the influence of Fed purchases.
    31 Mar 2012, 03:16 PM Reply Like
  • winningtrader
    , contributor
    Comments (2459) | Send Message
     
    I am not exaggerating at all. In fact, new bonds issued is what matters as the old bonds just change hands while new bonds need to find ''new'' money. The new ''investor'' is the FED for the most part. This is basically monetization of debt as the FED prints money to buy government paper.
    31 Mar 2012, 05:53 PM Reply Like
  • Garfield23
    , contributor
    Comments (154) | Send Message
     
    the only reason treasuries sold off was because gartman said this was his trade and people then took profits, HOWEVER this does not change the major trend upwards in prices.
    30 Mar 2012, 04:47 PM Reply Like
  • AlbyVA
    , contributor
    Comments (839) | Send Message
     
    Believe the Truth Garfield. This is a sign that Treasuries are a bubble and the massive sell off is about to detonate.
    30 Mar 2012, 11:25 PM Reply Like
  • Garfield23
    , contributor
    Comments (154) | Send Message
     
    Alby we disagree. all treasuries share a symbolic relationship to one another and with the 0-2 end at zero our 2% target for 10's and 3% for 30's is spot on, and in-line with averages set over the last 10 months and just 2 weeks ago.... - Germany's 10's are at 1.83%, so without going in a long bikkering back-and-forth, we see the trend continuing with treasury prices increasing. -

     

    Yes, i will give you the one point that yesterday (Friday) was a simple profit taking based off of gartman's comments (play the tape back and you will see), BUT in no way is the pricing uptrend broken.
    31 Mar 2012, 11:21 AM Reply Like
  • American in Paris
    , contributor
    Comments (5495) | Send Message
     
    TLT peaked at 123. It is now 112.5. The trend is down.
    31 Mar 2012, 03:16 PM Reply Like
  • Garfield23
    , contributor
    Comments (154) | Send Message
     
    TLT has been range bound between 110 and 124 over the last 6 months, so to say the trend is down (based on 2 weeks of data) is jumping the shark. - FYI, TLT hit lows much lower than this in last Oct and easily rebounded higher, so i would be very careful betting the ranch on your hopes and dreams of your outcome....
    31 Mar 2012, 03:54 PM Reply Like
  • apogee
    , contributor
    Comments (5) | Send Message
     
    unreal how they have kept rates so historically low. when it moves, it will be dramatic. it has always been about 2.5% above inflation
    31 Mar 2012, 05:42 PM Reply Like
  • Peregrinus
    , contributor
    Comments (124) | Send Message
     
    TMV closed the recent gap in the 78 - 80 range and turned back up. It doesn't look like it will resume its bouncy pattern around 70. Too bad because that represented a generous gift for those who sell TMV put options. The Greek default seems to have signaled a sea change in the bond market. We have had several days lately where equities and TVM have moved in opposite directions. This indicates a return to fundamentals in the bond market which means only one thing: higher interest rates.
    30 Mar 2012, 07:12 PM Reply Like
  • Garfield23
    , contributor
    Comments (154) | Send Message
     
    we disagree, and see the treasury prices reverting back to their norms....
    31 Mar 2012, 11:24 AM Reply Like
  • winningtrader
    , contributor
    Comments (2459) | Send Message
     
    It really depends on QE3 or not. No QE3 and treasuries are going to puke. I personally think that we get QE3 but the name maybe different this time. I think that somewhere between May and July is the most likely timing. I think that the new program will mostly target mortgage bonds but that doesn't really matter as it will affect treasury prices as well.
    31 Mar 2012, 11:47 AM Reply Like
  • Garfield23
    , contributor
    Comments (154) | Send Message
     
    we agree, as Bernanke does not want to put our recovery into jeopardy. for this reason alone, we see treasuries going back to where they were from January to mid-March, in which Bernanke was seeing what he wanted...-in essence the recovery is on life support and Bernanke is not going to give up after all is efforts so far.

     

    People who think that treasury yields will somehow rise dramatically are not mindful of Bernanke and just how determined he is., or how risk adverse people are when so much wealth destruction took place starting in 08.
    31 Mar 2012, 03:49 PM Reply Like
  • Lakeaffect
    , contributor
    Comments (1422) | Send Message
     
    That's the key. Bernanke will keep pumping. He said he will, and I see no reason to doubt him. Besides, if the Fed doesn't buy the new issuance, then rates will rise. So QE is coming.

     

    Whether this will work out in the long run will remain to be seen. But, for the time being, somebody has to buy the annual $1.3 trillion deficit.
    31 Mar 2012, 06:57 PM Reply Like
  • AlbyVA
    , contributor
    Comments (839) | Send Message
     
    The Fed is just taking the proceeds from existing Treasuries and turning around and buying additional Treasuries. They aren't printing "new" money. So there is no QE3. Call it QE2.5 via Interest Payments. Its funny when you think about it. The Treasury pays on the nation's debt. That money goes to the Fed. Who then turns around and buys additional debt from the Treasury. I'll call it a Circle Jerk. lol

     

    But this cannot last forever. The Fed isn't the biggest buyer of US Treasuries. All hope is pinned on China and other foreigners. Trouble is, with their declining economies, new money to buy Notes and Bonds is declining and thus Treasury Auctions might suffer. Which in turn will send yields higher.
    1 Apr 2012, 09:23 PM Reply Like
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