May 29th, 2009 12:06 pm | by John Jansen |

I am in beautiful Charlottesville Virginia today . Blogging today will be sparse from this point on as I am with my lovely wife,daughters and granddaughter. So family time takes precedence.

It appears that the sell off the other day was an exhaustion /climax trade from the crazed convexity crowd.

As I reported earlier there has been significant receiving in swaps and substantial buying of mortgages.

Some of the trade is aided by month end extension trades . Others perceive value at these yield levels and have piled in across the curve.

I will spend the rest of the day with my family and will resume active blogging Monday.

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  1. 7 Responses to “Update”

  2. By Tyler_K on May 29, 2009 | Reply

    I note that anyone having purchased yesterday’s 7yr has now been richly rewarded.

  3. By Chicken on May 29, 2009 | Reply

    Nice TLT rally out of the blue, seems like a casino everywhere I look these days. Must be some nice deals going on behind closed doors…

  4. By Bman on May 29, 2009 | Reply

    they carried-out a few “vigilantes” this afternoon.

  5. By Gary on May 29, 2009 | Reply

    You know a regime is in serious trouble when they make it illegal to short the regime’s bonds

  6. By Bond Girl on May 29, 2009 | Reply

    Same pattern we’ve seen for weeks, although it is getting a lot more extreme. When coupon supply returns in a week…

  7. By RatesGuy on May 31, 2009 | Reply

    Got to believe we are going to continue to see a steepening cycle, even given the past few weeks. Zero-coupon inflation swaps dropped out of negative (deflation) territory a month or two ago and concerns over deficit financing have got to push the back end higher. Given that, if inflation picks up will the Fed be bold enough to raise short term rates ? I don’t think so.

  8. By Gary on May 31, 2009 | Reply

    Even after Geithner/Bernanke announced they would manipulate the bond market with printed money — yields have increased and the dollar fallen.

    The Fed has lost credibility — they are a political entity now, beholden to the Treasury for existence. Remember when the Fed had a balance sheet that wasn’t all toxic waste?

    The Fed is no longer independent and is in no position to raise rates…

    So inflation is guaranteed to pick up. No one with any sense believes Bernanke is politically able to take back the flood of money he spewed the last year and a half.

    The market mantra “Don’t fight the Fed” is broken, the Fed has no money. The new mantra is “Don’t fight the Bank of China” — they have all the money.

    All hail the new overlords! Geithner will be bowing and scraping all over Beijing this week

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