Archive for December, 2013

Draghi on Rates

Sunday, December 29th, 2013

I received this from a fully paid up subscriber. Draghi sees no need for additional rate cuts.

Change in China

Saturday, December 28th, 2013

I dont know if there is hope in China but at least there is some change. That one party state has given a partial imprimatur to couples who want more than one child and it has also closed down forced labor camps. Via FT: China formally eases one-child policy SHANGHAI, Dec 28 – ...


Friday, December 27th, 2013

In a previous post I noted the hammering of European bonds and out performance of US 10 year. I also noted that I could not locate a reason. But seek and ye shall find and I have an answer. Jens Weidman of Germany lamented low interest rates and that precipitated ...


Friday, December 27th, 2013

The 10 year has breached the 3 percent level and is receiving a (dead cat?) bounce. I have heard of payers in 5s and some real money dabbling in long end. European fixed income getting hammered worse than US and I cant come up with a reason. UK, France, Germany and ...

Asset Allocation in Japan

Friday, December 27th, 2013

Here is an interesting tidbit via Mark Chandler at Brown Brothers. This is from his morning note. Via Mark Chandler: Separately, Japan’s $75 bln Civil Service Pension Fund said yesterday it has lowered allocations to Japanese bonds and raised weightings to domestic equities. The fund will reduce allocation to Japan bonds to ...

A Trickle Instead of A Torrent

Friday, December 27th, 2013

Mom and Pop are returning to the equity market but with wavering enthusiasm rather than elan. The WSJ story notes that between 2006 and 2012 investors withdrew $451 billion from equity funds.Inflows this year, in spite of a full throated rally, are less than the $126 billion withdrawn last year. ...

December 27 2013 Opening

Friday, December 27th, 2013

Prices of Treasury coupon securities have registered virtually no changes in overnight trading. The yield curve is steeper that it was twenty four hours ago but all of those changes occurred yesterday. The 5s 30s spread is at 218 basis points versus 216 at this hour yesterday. Similarly 10s 30s ...

Relative Value Sanctuary

Thursday, December 26th, 2013

The 7 year note appears to be the cheapest point on the yield curve. The 5s 7s 10s butterfly is generally rather pedestrian and it moves in a very discrete fashion. With the recent backup in yields that has changed and that spread has broken to multi year highs. In ...

Thirty Year Bond at Crucial Level

Thursday, December 26th, 2013

I was just checking Long Bond charts and there is significant resistance to higher yields in this lower 3.90s zone. I would suggest that a sustained breach of 3.93 percent level would augur a run back towards 4.125. There is an airpocket on the chart from late July 2011 until ...

Long Bond Note

Thursday, December 26th, 2013

I have always liked to watch the auction process to provide little guide posts and punctuation points for future trading. On December 12 the reopening of the Long Bond cleared at 3.90 and a dollar price of 97.359 which is some where just below 97-12.