Market Report And Chat Posts (Sept. 2, 2020): PAM Goes Large For Long Bond, And Short Gold Bets

Summary

• 10Yr yield is falling in accordance with the mini-seasonality hiccup of the TCB. By the time this mini-hiccup is over, the 10yr would have fallen to 0.57% - 0.56%.
• That much outlook deserves a stake -- PAM buys TN futures to take advantage of that move. We are not doing short equities, we go long bonds instead, large.
• Yields have been falling for at least a day, set equities still rose. That's potential trouble. That said, we bet large on long bonds, short gold which have better optics.
• The bottom in yield in this construct is TD 178 - TD 180. Maybe that is all there is to bear seasonality that I wrote about at Seeking Alpha. Nonetheless, the sell-off could be sharp, and deep.
• The schizophrenia and high variability in the equities response to falling yields is the primary reason why we opted out of shorting even the recent market dogs (which have performed relatively well today). The bond market is more predictable. Honestly, yes. The MOTUs are of one track mind when they get into a groove. That I know.

Robert P. Balan runs Predictive Analytic Models, #1-rated trading unit at Seeking Alpha. PAM trades Swiss HF funds using Federal Reserve, US Treasury, and term (money) market liquidity data flows as basis for trading decisions. He is domiciled in Zurich, Switzerland.

Robert Balan has 5 decades of experience in the financial markets. Education in Mining Engineering, Computer Science & Engineering, M.S in Quantitative Finance, and training in Economics led to a commodity analysis career during the commodity boom of the early 1970s. Robert made a switch to global macro focus in the early 1980 when the commodity bull market waned, with specialization in foreign exchange. Robert wrote a very high profile daily FX analysis while Geneva-based (Lloyds Bank Int'l) in the mid-1980s (the first FX commentary with a real global readership, "most accessed" in the Reuters and Telerate networks from 1988 to 1994).

He worked for Swiss Bank Corp and Union Bank of Switzerland (precursors of today's new UBS) as head of technical research in various finance centers (London, New York, and subsequently, head of prop trading at SBC in Toronto ) from the late 1980s to mid-1990s. A stint at Bank of America as head of global technical research followed in late 1990s to the early 2000s. 

Robert returned to Switzerland in 2004 as head of technical research and strategy, and FX market analyst for Swiss Life Asset Management in Zurich. Robert wrote FX analysis and capital markets commentary for Saxo Bank (Denmark) in the early 2000s. He joined Diapason Commodities Management (CH) in Lausanne in 2008 as senior market strategist, and subsequently Chief Market Strategist, utilizing fundamental macroeconomic drivers and structural/technical data in modeling asset price and sector movements. 

Robert wrote a book on the Elliott Wave Principle in 1988, which has been hailed by the London Society of Technical Analysts as best ever book written on the subject. Robert is a member of the National Association for Business Economics (NABE), U.S.A.