Monday, August 28, 2006

Ernesto -- "I'm going to DISNEY WORLD!"

Tropical Storm Ernesto is over Cuba and headed for Florida. Oil prices are falling considerably on the hope that Ernesto will give all the Gulf area oil and gas production facilities a miss.

Meanwhile, bonds are a bit lower, probably due to dealers pricing in a concession to the 2 and 5-year auctions this week. You could also have some consolidation here. As I've said, the market has rallied hard the last few weeks, and we now need some data pointing to a steeper economic downturn in order to further fuel the rally. I've eliminated all my directional bets and am setting up for a steepener.

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3 comments:

steve feiss said...

like your steepening plan and i would add recent CoTr data poses one of the biggest risks out there in Treasury market right now ... those 'specs' are running record short in 2s and record long in 10s and when (not IF in my opinion) the Fed stops tightening (debating another 25bps in Sept or before year's end is comical), there will be a very aggressive move to at the very least, cover this short in 2s ... constantly trying to keep my friends/clients out of harms way (NOT short 2s for a core position) and actually long 2s vs Eurozone equivalents (Schatz) has been a good way to make a living over course of past few months ...

GREAT blog, by the way ... read about it in today's WSJ!! Keep on keepin' on! Regards, Steve

Tom G. said...

Thanks for the comment. I've read the same about Street positions. Will be interesting as always.

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