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The Massively Crowded 'Long-USD, Short-Treasuries' Trade Just Got Crowded-er
The epic voyage of USD Longs and Treasury Shorts continues...
US Dollar speculative long positioning increased $2.5bn this week to a new record high $47.6bn (as EUR and JPY shorts rose further).
But it's not just the USDollar...
10Y Treasury Spec Short positions surged since the end of QE3 and Bullard's QE4 hints...
To their 'most short' since May 2006...
Each time in the past 17 years that shorts have surged, the squeeze comes and yields tumble.
* * *
Of course, specs are merely following the "Don't Fight The Fed" meme as they 'sell bonds' like they are told by The Fed - since the 'market', despite being its most negatively positioned in over 8 years, is apparently 'mispriced' (which as Rick Santelli explains below - is utterly ridiculous)
"if The Fed hasn't made up its mind" about when and how rates will rise, "how can markets 'price it in'?" ... and the rant ignites from there...
* * *
We are sure this will all end well.
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Treasury shorts. That joke never gets old.
The treasury has no clothes!
Actually, the Treasury has no treasure. Period...
Military power is only Treasurse.
Sorry, but incorrect understanding of what TREASURE means. Treasure is your military power. All else is illusion for the unaware. Simple as that.
That one waaay at the top has my new TV and Ipad in it!
I'm getting ready to short usd/jpy again. The weekly chart has got (3) shooting stars, and the daily chart is laughable.
I've no doubt that the BOJobs will eventually lose control, but the crosses and majors are extremely stretched.
I actually think Treasuries will open~up in yield as macro rebalances into EOY.
"The Jap pilots are out of ordnance...they'll be turning around and going home shortly...they have no other option."
Said lots of US sailors and Marines during WWII Pacific on US warships
be careful out there yen. imo ust and oil prices have given them all the cover they need to jam it up to 150.
When I trade against a runaway train I always place a 3000 pip stop loss. Just makes sense.
I'd suggest you research "hedging" Clint. Learn how to partially reverse your trade.
When your trailing stop or Hypothetic S/L gets hit do a partial posistion reversal.
The ALGO's go bonkers. ;-)
Not everyboy who reads on ZH is as savy as you. No sarc. Gottah protect the top callers.
Philo, I'm a graduate of the " School of Hard Knocks".
If I can suggest some ideas for my well versed Z/H brethren, I'll do so.
FWIW, I really enjoy your comments. I see some wisdom, and life experience.
FWIW, I really enjoy your comments. I see some wisdom, and life experience.
Ditto. Fellow School of Hard Knocks alum. Class of 1995.
Thanks for your kind comment... Ditto to you as well
My graduating class knows how to read a map.
same sentiment mate. hv avoided the inevitable pink slip..and still hanging on in following your calls.
Case and point. I couldn't trade like YenC, I don't have the gumption. Happy to sit and wait for the paint by numbers pullpack and let the experts and nutjobs play the counter. Big pin on the 1h might have been nice to play down but looks for all the world like a bull flag forming. Tbh I've been avoiding the Yen so far. Yeah, I missed out, but it's a bit wild for me, plenty of action around elsewhere and the Euro is getting interesting at these levels. G/l YenC, I wouldn't be surprised if all of these USD longs get squeezed hard soon so downside might well run for a bit.
Buzz you're absolutely correct. Cheap"out of the money" options have been purchased.
I paid the premium UP~Front. ;-)
Tks Mate. Same caution here. Will dribble in.
usdjpy is going to 120...id wait till there to short it.
usdjpy is going to 120...id wait till there to short it.
That brick wall is thicker than you might think. I exchanged 30k $ to yen this week @117.1. Lots of powder still left in case we do breach 120 but there is such a thing as letting greed get in the way of profit. 3 years ago I was buying $ with yen at a conversion rate of 77 to 1$. This isn't rocket science. Maybe we hit 120 by Jan 1 and maybe not - but I've got Japanese assets that need purchasing.
Cheers.
Great photo.
The Liberian-flagged Rena ... ran aground Oct. 5 on the Astrolabe Reef, about 14 miles from Tauranga Harbour on New Zealand's North Island. Moar...
I will be helping you tbond shorts out when you capitulate.
Where do you ZH's predict the 10 year will be in 30-60 days? I say sub 2%.
Don't know about within 60 days, but sure as all hell breaks loose, it will be well under 2% come hell or high water.
Liquidity Trap, bad global economy, more QE2infinity to follow, walking down the very same path as Japan. JGB 10's used to be well north of 3% long ago when she started into this experience. Now under 0.5%.
We're going down the very same path.
Even though we are exceptional
Plus, what with all the gloomers and doomers here (May I remind everybody that the world only ends once, BTW) the worse the gloom and doom, the more bigger the rush to safe assets which, for now, is Treasuries, like it or not.
I've been one of the few for years been saying, longer term, lower rates.
It is non consensus and consistent with the realities of Fiscal, economic and social policies.
And if you like T 10's you might just wanna stock up on really good munis. Because tax rates gonna be going up and things like the ATM ain't goin' away.
it's a no brainer. maybe 3 weeks.
that's where he is wrong. market manipulators know the fed will never raise rates and have priced that in to a T. NIRP 4evah, QE infinity.
It's time for some end-of-month bad news to set up the santa clause rally. Luckily, Iran, Isreal and fergeson are ready.
Yields look set to collapse. Been basing for a while now so yields down looks like probable resolution. And specs, just confirms the obvious. ;-)
And then there's King Dorrar! ROR
Nope, S/T yields are going to rise. In normal times your thesis makes sense.
You're going to be really perplexed next week as yields rise and equity markets stay flat , or selloff. Traditionally, rates rise with demand.
All of the CB gaming has reversed~ discovery, and traders see bond weakness as $ strength. (cash on the barrel-head)
When the equity markets adjust, the $ will in tandem.
Yen, the RBA is getting ready to cut rates.
They will to turn the property bubble to 11 to offset loss of revenue due to mining.
http://www.macrobusiness.com.au/2014/11/cs-rba-to-cut-on-fading-property/
The RBA is just jawboning. The only way Australia can keep interest in their "bond market", is to offer a premium.
Glenn Stevens is a "Piker"...
Blahhhh...Blahhh. terms of trade. The $AUD will be just fine. I'm actually long the Aussie.
I think the RBA is serious this time. They have been jawboning interests to the upside. But mining literally falling of a cliff, they need to keep the property game going a bit longer.
FIRE is the only game left in aussie town.
I respect your ideas... Thats why every trade has (2) sides.
The RBA will get eaten for lunch if they lower rates. The bond market will collapse.
Thanks, I value your input. I'm just dipping my toes back in FX and can learn a lot from real traders.
Keep an eye on eur/gbp, if you decide to take the plunge. ;-)
YES the Mining Sector is of no influence. The service economy is proportionately growing to be a larger share. RBA shall move to bring down interest rate. This is all coventional thoughts paraded by the market pundits.
With due respect, I think that this not normal times. No juice even if you are right as RBA not known to make big moves.
Yen, that is possible. However, looking at my proxy (TLT), though I don't have a long position, I could execute above a confirmed 120.66 (on hourly) with an initial target of 126.10.
The converse would be Sell below 118.68 with target of 113.39 (less likely).
Interesting, if equity markets adjust (assume correct), $ will follow, which should result in bond price gains. Isn't that the normal cycle?
@ Ironshield, that's a very good question, but it's also loaded. I don't personally trade Treasuries, but I know someone who does.
Knukles, is an expert bond trader. Ham Bone is another person I highly regard, when it comes to the bond market.
What are you hedging/proxying (TLT) against? I mean, are you just trading against your "money market" account, or against your " mortgages" to recapture gains and expenditures?
Yen Cross, these are pure spec plays to earn some extra beer/cognac money. Have had success with TLT in the past but only on proper setups. I believe we have such an opportunity now. No long term plays, only swings. And of course, religious about money/risk management.
I use same methodology for Indexes and PMs. Goal is 3-6% per month so not a giant by any stretch, but I smoke most money managers with little effort. Too lazy for anything else. ;-)
Aren't you sort of putting yourself at a disadvantage?
Your basket of trades is sort of contradictory with respect to vestiture windows.
You speak of making some S/T extracirrucular $ and speak of setups.
Swing trading is really an obscure way of saying I'm underwater on some of my shorter term trades and I've hedged myself without understanding correlations.
I'm not an Index trader, so I can't make suggestions. If you think the rate of devaluation/inflation is under 3-6% then KUDO's to you.
Interesting observation. There's no such thing as a basket; there's trade setups that present themselves at certain times based on certain indicators. No rhyme, no reason, no emotion. Unless you're one of those fundy types, then, what a tortured life you lead.
"Swing trading is really an obscure way of saying I'm underwater..." Quite a stretch, sometimes a trade is just a trade. ;-)
Sounds like you have your thoughts, I have mine. No problem, we can both make money, perhaps.
I'll humor you. TLT is a basket trade.
I'll humor you. It's just a trade.
A 3-6 month trade according to your above comment.
I hope not. ;-)
Edit: 112-119 about 2 months.
Oh let's talk about the other rigged markets.....
Let me get this straight: this is the "American decoupling", "US escape velocity recovery", "inflation-will-rise "Fed-will-raise rates" crowd...?
Deluded. Dreaming.
When you make the market it costs you nothing to short treasuries. However, when you do not make the market, all of the benefit of shorting treasuries go to those who make the market.
It therefore makes sense that it is the international banks who are shorting treasuries and they are also the owners of the Fed. There is perfect symmetry.
Wow, someone's long BTFATH. It must be one of those levered Corporate accounts at XYZ discount brokerage,( Hedgefund Startups)
10Y yield headed to sub-1%.
When the yields do finally bottom and start heading up, they won't stop. The System will have exhausted the last remnants of faith and trust, and we will get hyperinflation and the final death of the $USD.
End of The American Century, bitchezzz ...
USD was showing upside during the summer
http://bullandbearmash.com/chart/dollar-montly-breaks-close-85-move-usd-90/
We may stall at 89, but it won't be for long.
#unFed
Waaw, just waaw.
And it will get much, much more crowded-er.