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The Last Time Traders Were This Short 2Y Notes, Rates Collapsed
As rates fell last week, speculators in 2Y Treasury Notes added aggressively to their short positions. Positioning in 2Y Notes is now at its most short since mid-2007 (as 10Y Bond positioning surged to its most long in over a year), and if history is any guide to what happens next, rates are set to tumble.
The last time 2Y Note speculators were this short was mid-2007 and rates utterly collapsed soon after...
and as BofA notes, 10Y positioning is its most long in a year...
BofA is Bullish.
2yr yields are set to stall and correct lower after the test and hold of 58.9bps/61.1bps.
Immediate downside targets seen to the mid-Apr pivot at 47.8bps before renewed stabilization
Charts: Bloomberg and BofA
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Sooo your saying I should buy GPRO.....
There will be lots of videos of people riding the inverting yield curve. Gonna be dope.
I hope they have the camera on stick pointed at their face so I can see the shock and awe as rates plummet and their shorts get blown out..... Big shorts and a lot less supply due to the fed.... Recipe for a GPRO moment...?
Collapse from .000something to .000 something....thanks tyler
Sooo, it's a race to the bottom for a curve-carry trade?
Ehh... just tactical noise.
If you're playing the 2s10s curve you are directly fighting the Fed.
Flat curve = no inflation expectations, the dreaded D-word.
Head-fake.
Only way rates drop on the front end is a major mkt correction and Fed injection. Don't see that as likely.
How about videos of bankers jumping from 5 floors +?
Put that in your internet pipe, and smoke it.
rates going lower ... much lower
2 yr yield of 5%??? How quaint.
Here we go again with the shyster BofA analysis.
BofA desparately wants a steep yield curve
not the flatness headed our way
agree. NY Fed probably helping them trying to keep their necks above water in what seems to be a big losing interest rate position - look no further than almost $200 billion in reverse repos today and over $20 billion in securities lending (treasury collateral). seems like the NY FED, bill dudley, hates treasuries.
they were able to push rates up 20 basis points in a few days in the beginning of september so that they could rollover their losing futures contracts to december. but time doesn't stop, come later november they will be in even more trouble.
@madbraz
I humbly ask you to explain what you say in some way I can understand. Bonds/yields/bond shorts are a mystery. Or point me to where I can learn without having to run PIMCO.
In other words please Google translate...I do not believe that basic understanding of what you say is beyond me. Thanks.
Investopedia is a nice little common man explaination site for all financial related terms.
Easiest google search tips are always to simply search each term individually or in conjuction with question by themselves and you can find enough to educate yourself.
for example, you can search 'reverse repos', folllowed by "what is reverse repos", "what are reverse repos" "why reverse repos" "how do reverse repos work" and so on.
Thanks. I am aware of this resource.
I am clueless when it comes to the bond market. Not totally. Becausse a bond is easy to understand. The "game" is my confusion. The sophisticated game being played. So I guess I am asking for a "how to play hop scotch" simplified explanation of this current casino as it applies here.
Bonds are simple. You lend me money. buy my bond based on risk.....you get interest every year until maturity. Simple right? So how did this get so f'd up?
I am just not equipped to be a sociopath. And have no need to steal from others.
"contained"?
And this time, collpase to what? Nominal negative rates?
That will be the NEW*- "New" normal....
You'll get nothing, and like it!
Why???? Is someone auditing the Fed.....only that will raise rates...
What they better get busy on is crushing some silver and monkey-hammering VIX so that stawks can close green....the only thing that really matters after all.
did u see that bullshit in the last 30 minutes of trading???
what point r they attempting to make???
i mean, come on man...what the fuck.
this has got to a make treasury happy, they sell something at a markup which requires almost no interest paid on the principle.
Then 10 yrs rates are going higher?
Then 10 yrs rates are going higher?
At this point, that's what looks like will happen. Can't see how it affects gold or stocks - probably across the board deflation and flight to dollar - the SPY is in a massive ascending triangle (bearish) and is going to breakdown in the coming months. I think Yellen really means it - she doesn't have to hike rates anyways, loans will get called and capital will dry up - leading probably, to another QE
If anyone on Z/H was ever right for half a second the whole world would blow up IMHO. This commentary is wild speculation on my part.