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BofAML Warns "It's Time To Be Bearish On US Treasuries"

Tyler Durden's picture




 

It's time to turn bearish on US Treasuries, is the clarion call from BofAML's Macneil Curry. The impulsive advance in US 10yr yields from 2.669%/2.630% and Tuesday Bearish Engulfing Candles in many of the futures contracts (WN, US & FV), Curry says, means the larger bear trend has resumed. In 10yr yields Curry targets 2.950%/2.992% (the high end of the 4m 2.47%/3.00% area range trade). Pullbacks should be seen as temporary, corrective and an opportunity to go short. This bearish view, he warns, is invalidated on a 10yr yield move below the 2.659% lows of Nov-18. From a trading perspective they express this view by selling USZ3. Downside targets are seen to 128-22/128-12, with a stop above 133-10.

 

In yields...

 

and Futures...

 

Source: BofAML

 

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Wed, 11/20/2013 - 16:07 | 4174748 HedgeAccordingly
HedgeAccordingly's picture

LOL. A  bit late dont you think? the time to get bearish was with ZB was over 140 . 

http://hedge.ly/1fCbWyG

Wed, 11/20/2013 - 16:07 | 4174754 fonzannoon
fonzannoon's picture

No shit. Worthless.

Wed, 11/20/2013 - 16:16 | 4174802 max2205
max2205's picture

Really...really...sell call after they are down 30%....brilliant. ..graham summers teritory ML!

Wed, 11/20/2013 - 16:35 | 4174873 kralizec
kralizec's picture

On a day filled with stupid statements coming out of statist pricks...this headline may win the nutcracker prize!

Time to be bearish on Fedcoat paper?!

Where you been?

ROFLMAO!!!

Wed, 11/20/2013 - 16:36 | 4174884 Ham-bone
Ham-bone's picture

Yesterday, a story ran stating that gold closed @ $1230...then was later corrected...interesting???  See comments which were not corrected like the body of the story was...this ran as a ticker headline that gold holds below $1230...before being "corrected"

http://www.marketwatch.com/story/gold-marks-slight-gain-holds-below-1230oz-2013-11-19?link=MW_home_latest_news

Wed, 11/20/2013 - 19:14 | 4175419 The Alarmist
The Alarmist's picture

Let's see ... BoA thinks I should be short US T's ... time to go long on as much long duration as I can.

Wed, 11/20/2013 - 16:07 | 4174759 Say What Again
Say What Again's picture

I've been drawing all sorts of lines & retracement levels all over my charts too.

That will be $1029.95 please

Wed, 11/20/2013 - 16:08 | 4174762 101 years and c...
101 years and counting's picture

sounds like stocks are about to crumble.  which will send money "pouring" into bonds and yields lower.  ie, the opposite of what BAC is recommending.

Wed, 11/20/2013 - 16:10 | 4174770 resurger
resurger's picture

Yup!

Are they fucking running out of Muppets? Poor Bank of Merica

Wed, 11/20/2013 - 16:31 | 4174857 Boston
Boston's picture

which will send money "pouring" into bonds and yields lower.

 

Yes, but not before yields on the 10yr reach or even exceed 3.0%. I'm a buyer of the 10yr at 3+% yields....and will sell if/when stocks crumble, and talk of taper is withdrawn.

Wed, 11/20/2013 - 16:09 | 4174766 ghostfaceinvestah
ghostfaceinvestah's picture

Let's see, even talk (not action) on slowing down $85B A MONTH bond purchases sends asset prices reeling.

 

No, not a bubble at all....

Wed, 11/20/2013 - 16:11 | 4174779 Say What Again
Say What Again's picture

Technically its not a bubble...   Its a Ponzi scheme.

Either way, its evil.

</humor>

Wed, 11/20/2013 - 17:03 | 4175022 TheRideNeverEnds
TheRideNeverEnds's picture

Hey now; its not a ponzi scheme, its a buy the dip scheme.

 

http://youtu.be/jllJ-HeErjU

Wed, 11/20/2013 - 22:00 | 4176015 decon
decon's picture

GFI, your posts always bring a smile to my face.  Good to see you're still here old timer!

Wed, 11/20/2013 - 16:11 | 4174774 taketheredpill
taketheredpill's picture

 

 

As long as Equities are still OK...

 

 

 

Wed, 11/20/2013 - 16:14 | 4174790 CrashisOptimistic
CrashisOptimistic's picture

The stupid headlines are wrong.

"Taper Is Likely In The Next Few Months" is NOT what the minutes say.

They say data improvement to align with the Fed's predictions is likely (or no such prediction would exist) and such improvement would warrant consideration of taper.

It's all such bullshit.  The minutes do not say taper is likely; they say the data is likely to improve because the predictions are for improvement (when is that ever NOT true?).

Wed, 11/20/2013 - 16:16 | 4174799 Ham-bone
Ham-bone's picture

their advice is almost as bad as those suggesting to buy VXX on higher volatility -

VXX down almost 2% today while S&P swings down on a 20pt plus range...fucking worthless

Wed, 11/20/2013 - 16:16 | 4174804 Colonel Klink
Colonel Klink's picture

The overlords in charge will figure out how to drive the herd of muppets where they want them.  Have no fear.

Wed, 11/20/2013 - 16:20 | 4174813 Yen Cross
Yen Cross's picture

   Nah, it's not time yet. When usd/jpy does a face plant, it'll be time to get serious about shorting treasuries.

Wed, 11/20/2013 - 16:30 | 4174855 delivered
delivered's picture

The Fed is doing nothing more than "testing the waters" with market reactions. They do this from time to time, probing around, trying to get a sense of how the markets will react, poking and proding to see where the weaknesses lie (almost like the military evaluating the enemy early in the process).

But to me, here is the real long-term question on my mind. Who is going to buy UST's when the Fed steps out? A decade ago, social security was running a surplus (net buyer), pension/retirement plans were still building investmetn balances for Baby Boomers (net buyers), international markets and especially China were accumulating positions (net buyers), and the annual deficit was running at a much lower level meaning the new supply of USTs was easily digestable by the market. This all was occuring when rates were actually reasonable and provided real returns.

Fast forward to today. Social security is now running a deficit to support the retirement wave (net sellers), same goes for pension/retirement plans (pressure building to be net sellers), international markets have capped their exposure and now may be forced to be net sellers as a result of needing to fix their own messes (think China's debt timebomb), and the primary supply of new issuances of USTs is still running $800 +/- billion per year. Further, when the US really has to start "on boarding" all of its off balance sheet liabilities (now estimated to be well north of $100 trillion and growing with the aging population), the supply is going to increase further. 

The bottom line is that the Fed is the only real buyer left but not because of the new issuances entering the market. They need to maintain some order and stability in the secondary market as with a massive way of potential net sellers coming on the market over the coming decades, I'm not sure who is left to buy this crap.

So I present the question. Who is left to buy both the new issuances and re-selling of existing paper in the market as I'm not sure there really is a party other than the Fed that can keep this market from imploding?

As for trend lines, technical analysis, etc., I don't believe these offer much real assistance to long-term investors given the unprecidented level of CB intervention in the markets. Never on a global scale has this been witnessed before so there is no "case study" to reference by TPTB to determine and project an eventual outcome. What everyone is relying on is nothing more than economic theory at this point as nobody has any idea how this is going to end. 

ZH thoughts and comments are always very much appreciated.

Wed, 11/20/2013 - 16:33 | 4174875 CrashisOptimistic
CrashisOptimistic's picture

This is the same provocative question always asked, as if it has no answer.

Pension funds, mutual funds, and generic balanced porfolios are going to buy Treasuries -- because they always have.  That won't change because it's in their fucking bylaws.  They WILL own some % of assets as Treasuries.

And so the provocative question is answered.

Wed, 11/20/2013 - 19:40 | 4175512 disabledvet
disabledvet's picture

yeah, pretty much. we could get "sudden explosive growth syndrome" (SEGS) where we have something more than "recovery in name only." (RINO) ten year got clobbered again today. you won't hear me ever say "go hog wild in the debt markets" but clearly anyone saying "start shorting treasuries here" is signaling a truly catastrophic scenario. why would i buy BofA stock if treasuries are about to get crushed? the dollar would be a buy. XOM would be a buy. GE would be a buy. Fannie and Fred would be a buy. that would be about it. don't see anything on bitcoin here again...but that thing needs daily coverage...along with "what the hell is going on in china?" the yuan looks set to revalue in an epic way again...is that good for Japan and Korea? very confusing. epic gold slam down today as well. somebody is over-extended here. at some point we'll know.

Wed, 11/20/2013 - 16:45 | 4174935 MyBrothersKeeper
MyBrothersKeeper's picture

Nobody will be buying them in the quantity that the Fed has.  Pension and institutionals will buy some for sure, but not at that level.  IMO, the inflows will occur in 2 scenarios: when the masses see real danger in asset prices and the economy and start looking for some safety or when the Japan experiemnt goes bad and UST become the only "safe" haven.  The bammboozled are still believing we have a real recovery and are listening to all those asset managers/analysts saying it.  Once that turns and they don't believe it, they will be confident that rates will have peaked and they will capitulate from riskier assets in my opinion. 

I say no taper/taper talk keep 10 yr rangebound between 2.5-3%...beyond that in either direction will upset the Feds apple cart.

Wed, 11/20/2013 - 17:20 | 4175093 29.5 hours
29.5 hours's picture

 

 

"Who is going to buy UST's when the Fed steps out?"

Well, not Bank of America apparently. They are biting the hand that feeds them -- another indicator that this system of hocus-pocus is rotten ripe.

 

 

Wed, 11/20/2013 - 16:30 | 4174859 pragmatic hobo
pragmatic hobo's picture

bull shit ...

Wed, 11/20/2013 - 16:39 | 4174904 MyBrothersKeeper
MyBrothersKeeper's picture

I love it when a big bank guy calls a trend that is based soley on the suggestion of taper.  As i'v said 1000 times, as soon as the Fed comes out and says no taper in December this "bearish" trend will get monkey hammered the other direction.  We just had a solid 10 yr auction and an average 30 yr....and this guy is telling you the bearsish trend is back?.  No Johnny, those options are based on taper talk as well. The 10 basis point move in the 30 yr today is strictly do to taper talk and nothing else.  Heck even PIMCO has been touting the liklihood of a taper....at their own demise....for several months.

Maybe I'm wrong, i've been wrong before and will be again....but I think anyone who thinks an actual taper isn't going to move the 10-yr to 3.5-4.0% is off their rocker when housing has slowed considerably over last couple of months. I wish they'd rip the bandaid completely off and eliminate QE so we can allow asset prices to reflect reality....but the politicians/central bankers have shown they have no guts to be able to deal with the potential consequences of having done zero to improve the economy......and be blamed for making it worse.

Wed, 11/20/2013 - 16:40 | 4174912 Al Huxley
Al Huxley's picture

Eight points down on the S&P with 20 minutes left in today's game.  Can they pull a green close out of the hat?  This is the big question...

Wed, 11/20/2013 - 17:03 | 4175009 evernewecon
evernewecon's picture

 

 

 

Allowing for the AIG-GS tussle and

this, which appears working as a 

set-up acquiesced in by regulators,

who presumably come from the banks

anyway, 

 

http://www.bloomberg.com/news/2012-09-10/big-banks-hide-risk-transformin...

 

 

https://www.youtube.com/watch?v=Y1jD_D1KPj8

 

 

 

I hardly think we rate in terms of having 

our counterparties sustained.

 

 

So, just offering a thought with

only market commentary value, as

we may find ourselves not only thrust into

a casino economy but having mainly

adversity to invest in (hedging should be

an efficiency facilitator, not a vehicle

for profiting from adversity per se as a living)

I can see value in selling long hedges

forward (options) along with hedging 

presently, at least if you keep the 

cash ready.

 

 

After all, you need someone to make 

good on them, and at least from 

selling forward you get the cash up front.

 

 

Reader: the above type stuff can

be unsuitable to people very familiar

with options, often, and it's only there

for the economic commentary value.

 

I enjoy linking casino references also 

cause what may be more important that

the banks and their friends in government

take advantage of is the guaranteed

put up or shut-up'ability.

 

At YouTube, the movie that helps bring

home the point is 

A Big Hand For The Little Lady.

 

But really anyone who's ever played

any poker knows it.

 

 

 

 

 

 

 

Wed, 11/20/2013 - 19:20 | 4175433 The Alarmist
The Alarmist's picture

Next round of budget and debt ceiling coming up.  Must be time to short T's and SPY's and QQQ's so you can close out and go long on these at a massive proft both ways just before the world is saved yet again ... Do you think these bozos might all be millionaires and billionaires because they are wrapping the Street around their middle fingers?

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