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Thoughts Ahead Of The Auction
Submitted by Nic Lenoir of ICAP
The 10Y is in no man's land here for the day. We have key supports at 115-00.5 and 114-16 on the downside, and on the 30-minute chart we see there is a key resistance at 115-26 which the market needs to bypass to confirm the recent leg lower is completed. From a daily perspective the RSI tested support on Monday, the slow stochastic is oversold, and on further bullish price action will confirm a turn. While it is our preference that the market will bypass 115-26, those who have not bought Monday or Friday are probably better suited for confirmation as we are mid range in the very near term.
The interesting point is that the last two days of the sell-off Friday and Monday both happened in thin volume with a lot of market participants out on holiday. It was futures driven and initiated by leveraged fast money accounts. Meanwhile, the back up in yield is offering a good opportunity for real money to get better yields, and the next couple of weeks are relatively light in offering especially in light of the recent heavy issuance schedule.
In addition to that China has recently been using more accommodative rhetoric pointing out that the recent peg was an extraordinary measure to fight the crisis. Geithner seems to have acknowledged the hint by positively commenting on China's opening to the world. Now knowing that the secretary of Treasury is in China right now, on the day of a 10Y auction, it seems rather logical to think he will stop at nothing to show the premier a good time and ensure Asian demand is well represented at 1PM.
For these reasons, our technical bullish preference is reinforced going into the auction, watching for 115-26 as the key pivot resistance the market needs to break.
Good luck trading,
Nic
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Absolutely, a little chow mien, with some egg noodles and Tsingtao. Show 'em a good time Timmy!
It must have been a good auction. I'm shocked. ;-)
Well, with Dudley on the soapbox, Timmy in China and (as referenced earlier) the Greece issue, it makes sense, doesn't it? Could it be a deflation signal?? Gotta love the Gold "bitch"!
Good call.
Seems the futures for green ink are highly favorable!
Yeah... I'd like to see the details on this one. Very nice bid to cover... someone really wants to buy this stuff under a 4% yield.
And I don't think it's PIMCO.
Wow this auction was absurdly strong: Bid to cover a whopping 3.72, High Yield of 3.9% on $21B in notes.
Rumor a foreign solvency crisis to drive them into $USD.
Next, euroland stick-save drives equity markets higher.
Lather, rinse, repeat.
S&P nearly unchanged from the day. Well off the lows. Yield on the 10yr is 3.89. Sounds like a good auction to me.
Tim is in China to cheerlead and bow down to to Chinese in order to get them spending on our auction. No news here. I do not understand how they keep all these plates spinning.
Helluva blowjob Timmy, helluva blowjob!
I wonder if somehow that's the reason he has no eyebrows?
They are all in on the take. They are ALL ILLUMINATI. Rockefeller built China, after all.
A very real danger would be a falling USD index and rising Treasury interest rates, which would signal falling Treasury bond prices. Now, when this occurs it would suggest someone is selling their Treasury hoard, and running away. Watch for a bubble to pop in China maybe - they would need lots of cash fast.
I remember sometime in 2008 a store opened up where you would pay the owner so much money to come in and break shit in his store to get out your frustrations with the economy.
Does anyone know if this store is still open?
I have the need of his services right now!
Hoenig to be next Fed Chair....this means he is not to be trusted. REMEMBER! They play both sides. Hegel said so..............
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