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Trading Desk Post-FOMC Reactions Trickle In
From a reputable trading desk:
We all knew that Dudley had put in the QE floor at $500bn, the FOMC had no choice but to shoot higher to make any statement on intent but I'm troubled by slow pace of the QE add, $600bn over 8 months or roughly $75bn/month....I think we had expected a min of $100bn/month.
We should glean that 2011 is now completely written-off for rate hikes, there is a definite statement of worry on the key Housing sector, Employment and especially around 'low-ball' Inflation......the front-end accruals will all continue to work.
**Note: our current reccommendation is to buy the Green or 2yr Mar11 M/C 98.875/99.125 1x2 Callspread to capture the ride!**
The Fed is pegging the curve to stabilise the 10yr sector, with purchases to have an average duration of 5 to 6 years....we already saw 10yr option volatility hammered pre-announcement and let me remind you that our friends at PIMCO are short +200K of TY strangles around and including the 124 Puts and the 129 Calls!!!!
The longer-end of the treasury curve will remain very volatile!...nothing we can do about it...however, I'm sure the Fed actually has an intention to drive these yields lower...they may have failed with this paltry effort....I do hope that there statement of reviewing this process actually occurs...and soon!
Something interesting, as a slight aside, only Hoenig registered his dissent, all pundits claim that there is a firm 'gang of 3' still within the Fed ranks and this dissent will be seen when we get the Board Minutes of today's decision.
Furthermore, there will be further pressure of Bernanke, both internally and vocally externally....watch out this is a rotten situation that will further be exaggerated in January with new voting members.
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You can't call this anything other than disappointment when they're already asking for more slop in their gruel.
You want more.......MORE?
Hey CD... how are you doing? Hang in there. Manage your risk. We have cut back exposure significantly in the last 2-3 months. We're looking to increase it back up. Good luck buddy.
Hillarious, the gluttonous pigs are already squeelin! Hang onto your hats folks, seems this was not nearly enough slop to keep them grunting in bliss.
GOt dam the goona buy alla supply in belly and force yield pigs and carry hogs out the curve mudderfukkers
The "dispensed with" rule that the Fed can't buy more than 35% of any individual security is gonna mess with the yield curve. Steepens and that won't help housing any more than our already record low interest rates.
Average Joe goes to the polls and votes out the mad spenders in DC.
He wakes up this morning, and Ben Bernanke has stepped in to prevent austerity...oh, and average Joe's Tbills are cut off at the knees.
All in the name of rallying equities that the Criminal Syndicate known as Wall Street owns.
Nice.
When does the revolution start?
that really depends on whats on TV that night... can't miss Dancing with the Shits now can we....
nothing will change until the social security checks bounce, the food stamp cards get rejected, and welfare payments dont show up in accounts, then the shit will finally hit the fan. Oh yea, and the bank starts charging grandpa for holding his savings account money...
Not when they bounce but when they don't buy anything is more like it .
J6P gets angry over a fucking Baseball game. Shit like this means nothing. Pathetic!!
True, the country in general only deserves totaly whats going on.
Uh, NOW........
Chart: ES and ZB
http://99ercharts.blogspot.com/2010/11/es-zb_03.html
http://www.zerohedge.com/forum/99er-charts
PIMCO wasn't the only firm short vol. Harley Bassman at B of A/Merrillwide was touting that trade for a week. A lot of their clients put it on.
Is Pimco going to be forced to liquidate some inventory after that trade? The way bonds are dumping today, I cannot imagine shorting volatility through options was a good idea.
So, if what PIMPCO just pulled off was not insider trading, what does the term mean? Shouldn't the scum at the SEC at least apologize to Martha Stewart, and for that matter, the gang at Enron?
Squeel Wall St piggies SQUEEEEL!!! Real nice n good-like....
The same farmers who have loyally brought you the slop, one day will arrive with cleavers and aprons instead.
The bottom line is that this was less than the little piggies expected. A lot less.
I wonder what form their tantrum will manifest itself in?
during the holidays, whilst all drunk on spiked eggnog, football and china shit; the fed will state they'll triple this like last time...
'Watch out, this is a rotten situation'...I see nothing great here, theyre not impressed at all.
Even near $1 trillion doesnt satisfy the beast now, even for a few months....nevermind only 3 years ago the TOTAL amount of dollars in circulation was $800 billion to $1.2 trillion.
Did I actually hear Erin and Liesman discussing Bernanke's goal of driving equities higher so there would be a trickle down effect? Seriously, I just want to wake up and find it was all a bad dream.
Yep thats exactly what it seems like, something you wake up from and go 'WHEW! Wow that was WEIRD! Damn glad it was only a bizarre sweet pickle and salami induced dream'...
except in my dream liesman isn't there and i won't even go into the trickle down reference...
Off-topic but.....JeezoPete, who in their right mind is going to participate in the IPO of GM!?! Need to seriously have your fucking head examined if you're buying that crap.
Just saw the headline flash by that GM profits are expected to be just peachy! I wouldnt touch it ever.
It's the fat margins off the Volt
Dude! Not for it but, they'll make it work no matter how many billions it takes.
It's not like it's our money, it's like our great grandkids.
Why not?? As I said, I'm in Detroit for meetings and the auto execs are giddy and downright arrogant right now on this comeback. Having dinner with some execs in the suppliers tonight. These are the guys that said once we hit 12 million units, they'll be printing money in Detroit. Well, we hit over 12 million today - drinks are on them.
I would have thought that the equity index would have at least bounced off the ~1220 ceiling. Maybe A/H.
You can't have any pudding if you don't eat your meat. How can you have any pudding if you don't eat your meat!?
And like that a singular person makes the decision to add 900 billion in new debt for future generations of Americans to make whole the bankers that swindled their savings for the past two decades. No Congressional or Senate vote or option for a presidential veto. Just what the founders originally had intended which is why they set up 3 separate branches to create a system of checks and balances.
Yet this one branch usurps them all with one man. And the mainstream news will tout how wonderful these actions all are for the stablility of our economy.
Ben Bernanke: "In order to save the financial system I must first destroy it"
What a close....
Er, Goldman must have meant 1200 rather than 1120, oops.
No, they meant what they meant. How they trade it however...
Of course, I would NEVER suggest Goldman would trade against it's clients and/or put out contradictary data.
NEWSFLASH:
bernanke takes dump on middle-class; suggests that if we don't like it, next time we should be born as banksters.
But bernanke is showering bennieBuxs on the powers that be, so that ma and pa's 401k will be enriched, no matter where they throw the dart.
On my last life as I am told, so don't have to wish being a bankster in the next.
It's funny. It appears they want to simulate a yield curve that reflects a growing economy. Rather than pure stimulus, now it's painting a picture of reasonable inflation expectations. Who knew they had this finesse! I think the Fed should take on global warming.
The trade isn't working for PIMCO, or Goldman right now as the long bond is getting clocked.
The Fed's action looks like neither the hawks nor the doves had the upper hand, and so they compromised in the middle with 94% of the money being spent in the 1 - 10 year maturity range, with half of that spent 5 1/2 years and in. Seems like they're worried about exit risk.
And they get very little benefit from bringing down rates in the short end, as they're already near zero, and they get all the downside of a weaker currency, higher commodity prices, etc.
Why isn't the trade working for pimco? They threw in a strangle at 124/129 with the TY sitting at 126. They ripped a nice premium, generated theta, and still have an enormous stash of deliverables that have all appreciated since they ramped up earlier this year. Take your premium, take your gain, and call it a day while you wait for the fed to ramp up the price of all those mortgages you bought on the cheap over the last quarter. Seems like an overall smart play to me. Am i missing something obvious?
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