Posts Tagged ‘Bond’

Notes From Underground: GOLD … All the appearances of a tired BULL?

March 13, 2012

Yes, the FED released its FOMC statement today and there were no changes to the FED’S POLICY NOW AND FOR THE EXTENDED PERIOD INTO 2014. So here was nothing to upset the markets and as I read the statement for the third time in a 15-minute period, old man thoughts turned to BUYING GOLD. As a veteran trader and subsequently global macro investor for 35 years, the price action did not perform to my satisfaction. The January 25 FOMC statement was very similar. While that FOMC missive provided for the impetus for GOLD to rally and close on its highs, the action today was totally opposite as GOLD sold off and the EQUITY MARKETS RALLIED. The January 25 release also saw the EQUITIES RALLY into the close but today the stocks left the GOLD behind.

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Notes From Underground: One Month Down, Only Eleven to Go … Whew

January 31, 2012

The month of January was kind to equity investors, metals and other commodities. The star performers of last year, U.S. Treasuries, had a quiet month as the FED‘s latest policy statement provided a month-end boost to the long end of the market. I have argued that the BOND markets are badly broken because of the continued intervention of several of the world’s central banks into the sovereign debt markets via QE PROGRAMS of various sorts.

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Notes From Underground: Christine Lagarde, the Markets Turn Their Lonely Eyes To You

November 9, 2011

The European debt markets were thrown into further chaos today as the German/Italian 10-year notes spread blew up. In cash terms, the move was a widening of 58 basis points while in futures prices the differential was 512 ticks. Notes From Underground has been monitoring the BUND/BTP futures spread for almost two years. The BUND and BTP 10-year futures are the proxies for Europe as they are the only liquid contracts available to hedge risk. Prior to September 2009, the BUND was the only bond future contract available to manage risk and speculate on the European debt markets. The ITALIANS moves to list the BTP FUTURES so the banks and pensions would have a viable tool in which to hedge the massive amount of Italian debt that was in the market. It seemed that the Italian finance ministry had a noble intention, but as the debacle of the PIIGS has moved to center stage, the Italian BTP has been the only viable tool for speculators and hedgers to participate in the long end of the EURO debt markets.

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Notes From Underground: Better Data Leads to More of the Same

October 3, 2011

Global equity markets were battered for another day as investor fears continued to outweigh any desire to add risk to portfolios. All U.S. data releases were better than expected and even auto sales proved to be a million more units above consensus on an annualized basis. The equity markets did try to rally but the attempt was short-lived and by market’s end the selloff was greater than 2.5%. Commodities were soft and the DOLLAR continued to rally on its haven status. The BOND market saw the impact of the “TWIST” as it is now October and the SOMA (SYSTEM OPEN MARKET ACCOUNT) began its work on affecting TREASURY DURATION.

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Notes From Underground: Intervention where is THOU STING

August 4, 2011

Yesterday the Swiss National Bank surprised the markets by lowering overnight lending rates to basically ZERO–the nearby 90-Day EUROSWISS contract (Sept. 2011) traded for 2 basis points–or, 0.9998 for those keeping score. The SNB also pledged to increase sight deposits from 30 BILLION SWISS to 80 BILLION SWISS, a very aggressive liquidity add, all in an attempt to stem the rise in the FRANC. By the end of the trading day the SWISSIE recouped most of its overnight losses in an act of defiance.

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Notes From Underground: The Europeans delivered on a bailout of the Peripherals (Maybe So, Maybe Not)

July 21, 2011

After reading through the vast amount of news on the Brussels “emergency” meeting, I am not sure I truly understand what the final outcome of the European resolutions for financial stability entail. There are bond swaps on Greek debt, which will mean a soft default, and then there is an increase in the size of the EFSF funding and a move to allow the  buying of secondary sovereign bonds. Again, it is not so easily to understand at this juncture as so much contradictory information is being provided that the final agreement doesn’t appear at this time.

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Notes From Underground: A Very Slow news Weekend Unless You Are in the Middle East

April 24, 2011

The markets have been given a modicum of quiet as all ears turn  to this week’s FOMC meeting. It seems that the FOMC release will be at 11:30 a.m. CST, which is an hour and forty-five minutes earlier than usual and the Bernanke meeting with the press will begin at 1:15 p.m. CST. A great deal of importance is being place on this historic first press conference. Much is also being made about the end of QE2 but I am not one of those looking for wild action when the FED stops buying Treasury debt. It seems that the FED may not announce “new” purchases but it doesn’t mean that they won’t be rolling over expiring issues and purchasing other debt in the market with the rolled over money.

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Notes From Underground: Hey Mr.Bernanke and/FED–GOD GAVE YOU TWO EARS and ONE MOUTH SO LISTEN MORE AND SPEAK LESS!

April 14, 2011

The news out of Europe today was not favorable for Greece as it was reported in the German paper DIE WELT that German Finance Minister Wolfgang Schäuble suggested Greece would need to restructure. Schäuble’s comments led the cost of interest rate on the DEBT of the peripherals to rise. By day’s end, Greek 2-year rates climbed to 16.8 percent. Portugal rose 25 basis points to 8.87 percent and Ireland increased 25 basis points to 8.20 percent. Spain’s bonds were also priced higher as rates increased 10 basis points. All in all, not a very splendid day for the European debt-stressed nations, but yet again the DOLLAR could not gain ground against the EURO as an initial DOLLAR rally faded quickly. It appears that some central banks are recalibrating reserves as even a DOLLAR rally seems to be so short-lived. The EURO has performed well even though it has the cloud of uncertainty overhanging its economic and political situation.

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Notes From Underground: I will “Badger” Andy Stern on the issue of Undefunded pensions

February 18, 2011

No real surprises on the data releases yesterday. The U.S. inflation numbers were much as expected but all the DEBT futures markets rallied as it seems the shorts in the markets are nervous about new uncertainties in the Middle East. One would think that the equities would have been sold and the DOLLAR bought for safe-haven purposes, but this was not to be the case. The  DOLLAR safe-haven status is breaking down on a correlative basis, throwing all the “talking heads” into a confused state. As I continually warn the readers of NOTES, markets are dynamic in data usage and always in flux and for those who stay static in thought, I merely offer a shoulder on which to cry. What is bothering the markets?

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Notes From Underground: Healthy and Happy New Year to our Readers

December 30, 2010

It has been a great privilege to share my thoughts and market insights and allow me to occupy some of the highly prized real estate on your electronic devices. I can unequivocally say that I learn much from my readers and derive great benefit from synthesizing my thoughts and putting them into trades. The basis of NOTES is to make sense of the global political and financial fabric and then try to succeed where I believe the econometric and financial markets fail. It’s never easy to review one’s ideas and see where the failure to act has taken place.

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