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Bank Of America Finally Stopped Out Of Its Treasury Short

Tyler Durden's picture




 

For the past several weeks it felt as if Bank of America's chief technician, MacNeill Curry (or at least his clients) had an infinite balance sheet to fund relentless P&L losses, resulting from his daily recommendation to short the 10 Year, which contrary to the best wishes of the Fed and the sellside penguins constantly refused to go lower and validate the "economy is getting better" thesis. Today, even his TBTF balance sheet finally ran out, and moments ago he finally capitulated, and was stopped out on his TYU4 short.

From Bank of America:

Stopped out of TYU4 short. We are now neutral Treasuries

 

The break above 124-31+ in TYU4 and the push below 2.541% in 10yr yields has stopped us out of our TYU4 short and forced us to abandon our bearish Treasury view. Bigger picture, the long term bear trend remains intact absent a 10yr yield break of the May-29 low at 2.401%. However, for now we move to the sidelines. Immediate resistance is seen at 2.489%/2.464%, while bears need a break 2.552%/2.601% to gain control. Meanwhile we remain in our 5s30s flattener. 

 

Of course, this means that now, finally, the time to short the 10Y may have arrived.

 

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Thu, 07/10/2014 - 12:43 | 4943807 wallstreetapost...
wallstreetaposteriori's picture

pussies.....  Oh wait, I am long US treasuries.... suckas

Thu, 07/10/2014 - 12:54 | 4943886 CrashisOptimistic
CrashisOptimistic's picture

If you're long US Ts you see a poor economy and a relentless grind down to Japan's disaster, and capital gains as the yield falls.

If you're short US Ts you see a booming economy.

 

There is nothing more involved in the matter than that.

Thu, 07/10/2014 - 12:57 | 4943906 knukles
knukles's picture

Hah ha ha ha ha ha
I coulda told them they'd get had.

And I did.

PS, Crash, you got the perfect structural analysis.

Thu, 07/10/2014 - 12:46 | 4943827 moonstears
moonstears's picture

Remember when they stopped shorts on stawks in 09? BofA is a primary dealer, too. To quote "Bruce Almighty": "Back to you, fuckers!"

Thu, 07/10/2014 - 12:48 | 4943837 starman
starman's picture

Hello I need to speak to Eric Holder, oh he's on lunch brake. Should I call back in an hour? ......no don't bother.

Thu, 07/10/2014 - 12:49 | 4943845 AccreditedEYE
AccreditedEYE's picture

Right on time to cure the ST overbought-ness. Love these bozo's

Thu, 07/10/2014 - 12:51 | 4943868 buzzsaw99
buzzsaw99's picture

every time i think a move is caused by someone smart it turns out that it was someone stupid. alas.

Thu, 07/10/2014 - 13:07 | 4943966 AccreditedEYE
AccreditedEYE's picture

Lulz. Yup, past 5yrs been a tremendous learning experience.

Thu, 07/10/2014 - 12:49 | 4943850 buzzsaw99
buzzsaw99's picture

i love the smell of napalm in the morning...

Thu, 07/10/2014 - 12:56 | 4943897 Emergency Ward
Emergency Ward's picture

smells like...victory...

Thu, 07/10/2014 - 12:50 | 4943854 orangegeek
orangegeek's picture

BOA lost some cash. 

 

that's ok, uncle yellen will just send the trucks over with some fresh print.

 

not a problem.

Thu, 07/10/2014 - 12:49 | 4943858 madbraz
madbraz's picture

Big banks shorting government bonds of their own country with the assistance of the NY FED.  How patriotic.  Oh we are blessed to live in a time when these people roam in high places...

 

Back in the day, this was considered high treason and these elements would probably hang.

 

 

Thu, 07/10/2014 - 12:56 | 4943902 moonstears
moonstears's picture

They are a primary dealer of USTs, forced to buy, it's a hedge, so legit, if you believe shorting to hedge is legit (I do)...none the less, "Fuck B of A'" IMO

Thu, 07/10/2014 - 13:18 | 4944024 NOTaREALmerican
NOTaREALmerican's picture

Well, come-on.   Patriotism is for the dumbasses to believe in slow-motion eagles and flags and kill their children in patriotic wars.   The smart-n-savvy people are above simple patriotism, which keeps their children safer too.

Thu, 07/10/2014 - 12:51 | 4943873 Boston
Boston's picture

I'm surprised Curry made this mistake....especially after correctly calling for yields to drop back in late 2013 (when the 10y was close to 3.0%).

The technical damage from this spring has not been reversed. And if you believe that scared money still runs to hide in T-notes (I do*), and if you believe equities are due for a correction (I do), then you should be net long T-notes. 

* Witness today, so far---At the open, when the S&P was down almost 20pts, the 10yr yield was down about 5bps. Now, when the S&P is down less than 10pts, the 10yr yield is down only ~2.5bps. So what happens to the 10y yield when the S&P corrects by 100+ points????

Thu, 07/10/2014 - 12:56 | 4943908 CrashisOptimistic
CrashisOptimistic's picture

As best I know the bond market is probably too outright large to move with algos.

Rather than correlate to the S&P, it just judges future economic activity.  And for now it says that is dogshit.

Thu, 07/10/2014 - 13:04 | 4943952 Boston
Boston's picture

Your argument---which I completely agree with---is another reason to be long........ for the long-term.

My point allows one to add a shorter-term trading strategy to the long-term buy-and-hold approach.

So I hold an untouchable core position and trade around it with on big up and down days.

Thu, 07/10/2014 - 14:12 | 4944269 DrDinkus
DrDinkus's picture

completely disagree. i trade UST's all day every day, and they most certainly correlate with other markets...notably SPs and JPY

Thu, 07/10/2014 - 13:09 | 4943980 madbraz
madbraz's picture

In the long-run, for sure.  Strongly correlated to GDP growth -  in theory should match otherwise country is in trouble (if not a currency issuer).

 

This is why France has problems, even with a 30yr bond of 2.68% (gasp, 70 bps less than us!).

Thu, 07/10/2014 - 13:15 | 4944009 madbraz
madbraz's picture

The market is very large for bills and shorter maturities.  Not so large for 10yr and longer.  

Thu, 07/10/2014 - 12:58 | 4943911 madbraz
madbraz's picture

Before the appearance of algos and HFT in the treasury market (wink, wink NY FED?), it was common to see the long bond drop by 10 bps or more on big down days in equities.  They are trying to suppress this, I believe, but the demand is there and it is not going to get any lower in the absence of economic growth (not a decrease in growth, absence!).

Thu, 07/10/2014 - 12:56 | 4943905 Tulpa
Tulpa's picture

We'll all be long T-notes after the bail-in.

Thu, 07/10/2014 - 13:09 | 4943959 A82EBA
A82EBA's picture

lol, maybe they'll bail us in to buy gold

Thu, 07/10/2014 - 13:11 | 4943989 Bluntly Put
Bluntly Put's picture

Considering you will never really be able to draw from your MyRA, you will be very long indeed.

Thu, 07/10/2014 - 13:13 | 4944004 moonstears
moonstears's picture

+1 ...and once IRAs are renamed "Freedom Annuities"

Thu, 07/10/2014 - 13:43 | 4944129 gboos
gboos's picture

Just read an article here, some days ago or maybe 2 weeks, about all the problems with the FED and the bond bying program, problems in the repos, huge shorts in the treasuries, collaterals from TY's are called etc etc etc .... 

With all that facts, who ran in this squeeze should be fired. But who cares ........

 

 

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