andrewunknown

10 Year UST Yield: Setting up for Major Septaper Disappointment?

INDEX:TNX   10-Year Treasury Note
961 24 4
10 Year UST             Yield: Setting up for Major Septaper Disappointment?
also, congress need to decide whether to increase the debt ceiling level. They have till Mid - October.
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Great point - the macro context here is anything but certain - that the long treasury selloff has stalled out just after the yield breakout (ZB is nowhere near breaking its descending TL) is indicative of that. IG Corps, USTs and MBS are in overall agreement here, along with the USD - equities are really the single asset class outlier.
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Certain patterns in other charts ... my growing suspicion for a couple of weeks or more: Sep'not'taper
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andrewunknown finitemonk
You're right: other asset classes - USD crosses for example - reflect the hesitancy to just assume a taper in September will happen. ZN has broken out, true; but Treasuries look due for tradeable bounce, which may indicate sentiment is leaning toward a delay of the taper to December, at least.
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Check out the Secular Bond Bull Monthly chart that is companion to this here:
Is a Secular Bear Market in Bonds Beginning Now? $TNX $ZN_F
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We are close to the 3% psychological level...
The taper trade is over played. What if the Fed do a "light" tapering, or no tapering at all? then the yield will drop...
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andrewunknown fb_fabien
It's difficult to say what the market would deem a "disappointing" taper: Esther George would like a $15B reduction to $70B this month. $10B evenly split between USTs and MBS is another idea I've seen more than once. Given how aggressively USTs have sold off, something very hawkish will have to be announced to renew UST bearish fervor here. The composition of the FOMC (uber-dovish), their feelings (I'm sure) the market has over-discounted tapering (hell, the market has begun to discount Fed portfolio liquidation), and the firming but not exactly stellar macro data (e.g. Summer NFP revisions bring rolling 4-month avg May-Aug down to 160k) all suggest to me what you've concluded: the trade is overextended. The FOMC is the likeliest catalyst to now bring the pendulum back in the other direction.
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everyone already sold on Sept taper and now were guessing how many billions in reduction.. if it don't come in Decemeber what will happen... S&P blast off !
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QuantitativeExhaustion QuantitativeExhaustion
sorry should say.. if it don't come in September ..what will happen?
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andrewunknown QuantitativeExhaustion
That's the tough question: easy to say "it won't happen"; or "it will be disappointing". But, then what? The next FOMC is October 29-30; but it's not accompanied by Bernanke Q&A. The one following occurs December 17-18. Whenever it begins, it will occur at a regularly-scheduled FOMC (don't want to attach extraordinary significance or a sense of urgency by making a special announcement), and one with a Q&A after since clearly communicating the rationale will be critical to dampening market volatility and setting expectations. So, September 18, or December 18.

A very small (<$5bln) taper or none at in all in September may mean a continuation rally; but after all the anticipation, it may actually startle and frighten. Remember QE3 was announced by Bernanke at last year's September FOMC on 09/13/12: and the S&P declined ~10% in the 2 months following. This meeting may also be "too much of a good (dovish) thing" if taper doesn't occur. But then again, you may be right - I just like to consider all angles!
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yeah all big Fed moves are meetings tied with Q&A from the Chairman. + we have the added talk of Larry Summers hawkish vs. Janet Yellen Dovish
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andrewunknown QuantitativeExhaustion
supposedly now put on-hold by Obama because of Syria. LOL Guess it's ill-advised to change Fed chairmen mid-stream when you're riding hard to war.
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Well they must believe this Syria+BRICS situation could have implication for a long period. Wonder what's going on behind the scenes here?
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andrewunknown QuantitativeExhaustion
So hard to say: the more Kerry and O Administration surrogates push "beyond a reasonable doubt" etc. without manifesting decisive evidence and making a clear-cut case, the more skeptical I become and more suspicious that something significant really *is* going on behind the scenes. But you're right, hints like Fed chairman pause - after all, isn't that widely rumored to take place 4 months from now in January? - are reason to wonder.
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Could be a hold on Federal Reserve Taper. Tapering talk is and has been a crux to BRIC economic growth.
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What if Obama is dealing a 2014 Fed taper with the BRICs and Syria?... longer the Federal Reserve holds out of tapering the better off Emerging market powerhouses BRIC economies do.
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andrewunknown QuantitativeExhaustion
forgot to add: Here's a blog post I wrote over the weekend that further explores some technical basis for an imminent rally in Treasuries; and what that could look like (on the 30yr) in concrete terms. http://www.seeitmarket.com/is-septembers-fomc-setting-up-a-us-treasuries-rally-15050/
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Very nice. I bookmarked your blog. I think we could see a rally too. I expect a rally in both bonds and dollar. Emerging markets might see a big boost as well.
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andrewunknown QuantitativeExhaustion
Thanks for taking a look! Similar perspective here: always glad to see some real range and movement coming back in after the summer - just hope it isn't the September 2011 variety.... Thanks for the chat: trade'em well!
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All BRICS are against attack on Syria. Is there a backdoor deal happening. Looks like Syria is talking with China/Russia to hand over CBR weapons to UN for some kind of favor from US and Obama. Whatever this deal making is, should have a long term impact on Trade, inflation/deflation and markets. Syria is the economic proxy
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andrewunknown QuantitativeExhaustion
perhaps - if Syria expresses willingness to comply to impartial - UN - request to hand over *all* weapons, US cannot balk at that. There is NO way Congress would approve - not that they'd approve it anyway - military action, even if it's "unbelievably small" in Kerry's words if Syria makes overtures of resolution through multi-lateral/UN diplomacy.

But, there has to be a way for "us" (read: our Red Line In Chief) to back down and back away without seeming weak or like we're capitulating. How that'll look publicly will be interesting - and probably sad and laughable - but what concessions will be given in the back-room of "give us a reason not to bomb you" diplomacy are anyone's guess. This "brief" event is likely to have far-reaching implications, I'd agree.
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I'm thinking that back room deal involves delayed taper from US Federal Rerserve. This would put oil and energy prices at ease, from both later taper and less Middle East tension. Both, later taper and lower energy prices, would help emerging economies such as BRICs economies.
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snapshot


Looking to go long EEM if so
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andrewunknown QuantitativeExhaustion
for whatever reason, comments kept appearing in my activity but stopped posting here yesterday afternoon - sorry to drop off like that.

Anyway: I'm familiar with it, but hadn't given the implications for BRICS or EM quite as much consideration - but no doubt this month's (non?)decision will of significantly impact them, just as the last 4 months of speculation has. Time for some additional research! Thanks for the chart.
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