Friday, May 7, 2010

Don't Look now But Treasuries are Selling Off

Just a quick note folks.

The 10 year is selling off today:


Quick Take:

I have been keeping a close eye on treasuries today to look for signs of the European debt contagion spreading over here to the US. I find the selloff today in treasuries to be pretty ominous considering the fact that stocks are down triple digits as I type.

Remember: We are selling massive amounts of treasury debt next week.

Here is the schedule:

"13 wk Bill
05/10/10
05/13/10
26B
26 wk Bill
05/10/10
05/13/10
26B
3 yr Note
05/11/10
05/17/10
38B
10 yr Note
05/12/10
05/17/10
24B
30 yr Bond
05/13/10
05/17/10
16B"

The risk of a global sovereign bond panic is possible if these auctions don't do well IMO. Let's get real: Our debt to GDP ratio is really no better than Greece or Portugal's. To think "it's different over here" is akin a realtor telling you that "real estate always goes up!".

The vigilantes could easily do the same thing to our bonds over here. All hell could break loose if we see bad BTC's. Focus carefully on the longer end bond auctions next week. Those should be a very tough sell following the chaos in the European debt markets that we saw in the past week or so across the pond

To be fair, treasuries have soared in the last several days so we were due for a pullback.

Gold and silver are also soaring today which could be a signal that people are looking for alternatives to US bonds with their "flight to safety" trades.

Disclosure: No new positions at the time of publication but very tempted to short T-bills at these levels.

12 comments:

getyourselfconnected said...

I missed the bond action today totally, thanks for the heads up.

flipdippy said...

Killians are still $1 at High Topps.

Who cares about bonds?

It's still weird getting alerts there are new posts here.

Get - did you see the alpo futures action?

Or this steal at costco? http://bit.ly/bRM3wr

Jeff said...

Flip

LOL

Drinking a vodka tonic as I type. I need about 10 more after this week!

Expect more alerts. The markets are finally getting interesting again after months of manipulated boredom!

getyourselfconnected said...

Flip,
I have a wall of rice, SPAM, and other goods already set up. Are you making fun of me?

I have a great drinking cat picture up tonight that speaks to this week.

OT,
See Silver today? My baby!

Herb said...

Where is the money moving to?

Jeff said...

Herb

The mattress!

Anonymous said...

thanks jeff please keep us posted on all the points youve raised next week.

Anonymous said...

if silver breaks over 19.5 and holds.... up up up we go.

Jeff said...

Anon

I will keep you updated.

The longer bonds are leter on in the week so thats when the real action begins in the bond market.

Anon 2


I was happy with that move in silver because I own some SLV.

Some are speculating that that was a short covering rally. The price action was strange on that Friday.

JPM supposedly has a huge short [position on silver. You are right if it keeps moving higher due to flight to safety from Europe it could soar as more shorts cover.

getyourselfconnected said...

I put up pics of the sets of ribs I cooked yesterday if you want to get hungry.

flipdippy said...

Nice meat.

I always lived by the rule, if it has parents: eat it.

These markets are interesting, but like my dysfunctional brother in law, at least the actions have some sort of perverted logic.

Up up and away we go!

jeff said...

TARP 2 Europe style!

The poroblem is the ECB can't print like the US.

I may short if we pop up all week.

We also have all of those treasury sales this week.

What a whacky market! Loving this voloatility. Makes things interesting again.