- I know I didn't post a technical piece on Friday. I've been looking at the charts in my normal course of business and can't find any worthwhile patterns. Didn't want to bore you. I do think a short going into this week's auctions is a smart move. I don't think we can rally much beyond 3.44% whereas I think we can easily get into the 3.70's. In other words, good risk/reward.
- Following that up, did you notice that the 10-year and 30-year auctions have been massively upsized? October's 10/30 auctions were $20 and $12 billion respectively. In November they will be $25 and $16. Ooo tee dee! And yet if the Treasury really wants to get to a 6-7 year average maturity for U.S. debt, these auctions are only going to get larger.
- This is also the first set of auctions in the post QE (at least for Treasuries) world. Not that I think the lack of QE will show up in this auction per se, but let's watch.
- Meet the new Kraft/Cadbury bid. Same as the old Kraft/Cadbury bid. KFT bonds moving tighter. Don't really agree with that move. I think this thing turning hostile is more uncertainty. Not less.
- Back bid striking back in corporates. I'm short and frustrated.
Monday, November 09, 2009
Clumsy and Random Thoughts 11/9/2009
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9 comments:
Don't agree. If you're thinking of shorting here ahead of the 10y/30y auctions, that means you think DXY will go below 75? Which would surely bring about a whole new set of problems, like crude oil going on a tear. Very struck by the lack of trading in almost everything today - low volume in equities, again. Seems like big players want to see what the dollar is going to do here at this critical level. Might be more inclined to short the long end AFTER the 30y auctions - assuming they go reasonably well, that is.
Accrued, you wrote: "I've been looking at the charts in my normal course of business and can't find any worthwhile patterns".
I think this is wise. I've seen too many traders (myself included) feel compelled to trade when there's no compelling trade out there. If the technicals aren't telling you anything, best to just wait.
The October 10-year and 30-year auctions were reopenings. The better size comparison would be to the August refunding auctions -- $23 bln in the case of the 10-year and $15 bln for the 30-year. They are still larger this time around and will continue to grow, but the increases are not quite as massive as your post makes them out to be. The 10-year and 30-year auctions in December and January will be reopenings again, and, thus, smaller than this month.
Left:
I don't make a particular link to the dollar, although if I had to bet I'd bet with the trend and say it goes lower.
Meta:
Agree. Some of my worst trades have been when I felt compeled to do SOMETHING when nothing was really there. Always dumb.
John:
In my mind, old 10s compete with new 10s, so whether its a reopening or not doesn't matter. Its how many bonds are being sold at one time that matters.
I agree with John that The 10-year and 30-year auctions in December and January will be reopening again, and, thus, smaller than this month.
Nobody noticed that the fed buying of treasuries ended the same time as the federal fiscal year end in October.
The media somehow believes that the economy is somehow fixed just because the federal fiscal year ended (i.e. just because the fed is not buying treasuries).
I think the DXY will continue heading lower. The trend is still your friend I guess in these markets. Lower dollar, higher gold price. Even though I still have my long term gold position, I don't think having a shorter term position at this time is a good idea. While I wouldn't want to short gold right now, from a risk-return perspective I think having no short term position is the best option currently. But I did just see this morning that a gold mining company that I like, Premier Gold, reported good drilling results from its Hardrock project - Premier Gold Hits More High-Grade Gold at Hardrock - the company is also a lot less speculative than other junior miners because it has numerous projects in the pipeline and an experienced mgmt team, including the CEO, who sold his prior company to a large base metal conglomerate.
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