AuthorTopic: Big Slide v2.0 Begins  (Read 102742 times)

Offline Palloy2

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Re: Big Slide v2.0 Begins
« Reply #465 on: February 13, 2018, 06:37:50 PM »
https://wolfstreet.com/2018/02/13/record-short-bets-against-10-year-treasury-promise-turmoil/
Record Short Bets against 10-Year Treasury Promise Turmoil
Wolf Richter
Feb 13, 2018

The 10-year Treasury yield closed on Monday at 2.86% the highest since January 16, 2014, after briefly kissing 2.89% during the day. At the moment, it is holding at 2.85%. Bond prices fall when yields rise – and being short the 10-year Treasury, and thus betting on a rising yield, has become a very crowded and profitable trade for hedge funds and other speculators.

Short bets in 10-year Treasury futures rose to 939,351 contracts, the most ever, according to Commodity Futures Trading Commission data through February 6, cited by Bloomberg yesterday.

This record came even after the market turmoil on February 5, when the Dow plunged 4.6% and when, briefly, Treasuries soared, with the 10-year yield dropping 13 basis points, which would have made shorts very nervous. But apparently, they hung on, as their record short positions through February 6 shows, when the 10-year yield rose again and closed at 2.79%.

The next step is 3%. The last time the 10-year yield was 3% was in early January 2014, and then only for a few days at the end of a brief spike. In May 2013, it got close, but no cigar (2.98%). And before then, it was at 3% in July 2011.

That 3% is a key level for another reason. At around 3%, the 10-year becomes very alluring for long-term holders, given today’s dividend yields and other yields, and it will bring out more buyers.

The emergence of these additional buyers may coincide with short-sellers trying to take profits, which may conspire to pump up the price and push down the yield. And this, fired up by speculators trying to get out of a short position, would turn into a sharp snap-back rally for the 10-year Treasury, and a sharp drop in yields. This could take off even before the 10-year yield hits 3%, and it could catch some speculators by surprise.

Tomorrow, those speculators will get to deal with the Consumer Price Index. If it comes in “benign,” it could trigger a buying spree of Treasuries with longer maturities and push down their yields. If it comes in on the upside, yields could jump on their way to 3%. For highly leveraged shorts, this will be a white-knuckle moment.

The chart above shows how smooth the one-way bet against the 10-year Treasury has been since September last year. The market, just when it gets this crowded on one side of the boat, is setting up for a downward jag in that smooth spike. With speculators suddenly switching sides, we could see some wild gyrations over the next few weeks.

But on March 21, the FOMC will likely announce the next rate hike and might give clues on what lies ahead. The yield curve has been steepening gently from its dreadfully flat slope late last year, and this is a trend I expect to continue; so in this scenario, over time, the 10-year yield would rise faster than yields of shorter maturities.

The fire under the 10-year yield will be fueled also by the Fed’s QE Unwind that has now accelerated and by the surge in new issuance of bonds to cover the ballooning deficits. These new bonds need to find buyers just when the Fed is whittling down its own pile. And they will have to have juicy yields to lure buyers into the market.

So I expect some wild gyrations that will likely give some shorts a bloody nose. But then, the 10-year yield will respond by rising slightly faster than shorter-term yields. And when it clearly and for good breaks above the 3% level, the 10-year yield will once again give confidence to shorts that it’s ready for the next leg up. But just because this is one of the seemingly most logical bets at the moment doesn’t mean it will be a smooth and pain-free ride.

The chorus is getting louder. But no one will be ready for those mortgage rates.
"The State is a body of armed men."

Offline Golden Oxen

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Re: Big Slide v2.0 Begins
« Reply #466 on: February 28, 2018, 08:08:47 PM »
Market cracked big time today.

Strange how it got slammed a few hundred points right at the close after already being down 200.

Off around 400 in total and not looking very good.  ::) ::) :dontknow:

Online RE

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Re: Big Slide v2.0 Begins
« Reply #467 on: February 28, 2018, 08:18:31 PM »
Market cracked big time today.

Strange how it got slammed a few hundred points right at the close after already being down 200.

Off around 400 in total and not looking very good.  ::) ::) :dontknow:

BTFD.  ::)

I'm not going to play that game, you gotta do too much trading.  I'll wait for a reall SERIOUS dip before I might drop back in.

RE
« Last Edit: February 28, 2018, 08:46:53 PM by RE »
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Offline Eddie

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Re: Big Slide v2.0 Begins
« Reply #468 on: February 28, 2018, 09:21:15 PM »
Market cracked big time today.

Strange how it got slammed a few hundred points right at the close after already being down 200.

Off around 400 in total and not looking very good.  ::) ::) :dontknow:

On the brighter side, pot stocks bounced and I made a few thousand bucks. I am mostly in cash though. I have one big trade on still.
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Offline Golden Oxen

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Re: Big Slide v2.0 Begins
« Reply #469 on: March 01, 2018, 03:00:45 AM »
Market cracked big time today.

Strange how it got slammed a few hundred points right at the close after already being down 200.

Off around 400 in total and not looking very good.  ::) ::) :dontknow:

BTFD.  ::)

I'm not going to play that game, you gotta do too much trading.  I'll wait for a reall SERIOUS dip before I might drop back in.

RE

A very wise decision on your part IMO.

The gyrations are unplayable, their computer driven with speed and access that cannot be approached by the average retail investor.

More disgusting is the fact that when you are correct and are trying to make a move, the systems go tilt at all the retail brokers and work just fine for Goldman Suchs and JPM and company.

When their session of sodomy and fuckduckery is completed, all is back to normal as they proceed to feed out their recent ill gotten positions to the Dim, who usually think their cool day traders.

After a crash when the dust settles and things quiet down is usually the best place and point in time to initiate an investment position.

"Bulls make Money." Bears Make Money." "Pigs and Traders go Broke."

Of course there are always rare exceptions to the rule.


                                     
« Last Edit: March 01, 2018, 03:09:07 AM by Golden Oxen »

Offline Palloy2

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Re: Big Slide v2.0 Begins
« Reply #470 on: March 01, 2018, 04:32:22 AM »
Quote
GO: Of course there are always rare exceptions to the rule.

Yes, one exception being the Last Crash, after which there are no investment positions ever again.
"The State is a body of armed men."

Offline Eddie

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Re: Big Slide v2.0 Begins
« Reply #471 on: March 01, 2018, 05:35:51 AM »
Not so. The Last Crash will just cause a major shift in wealth from digital assets and money, to hard assets and arable land.

Exactly how it plays out has a lot to do with whether it's caused by a credit crash or a nuclear war, or some other Horseman of the Apocalypse. Human needs won't entirely change, and therefore certain traditions will persist for a while,as long as there are societies with populations of any size.
What makes the desert beautiful is that somewhere it hides a well.

Online RE

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Re: Big Slide v2.0 Begins
« Reply #472 on: March 01, 2018, 05:45:29 AM »
Not so. The Last Crash will just cause a major shift in wealth from digital assets and money, to hard assets and arable land.

First off, you can only "own" what you can protect & defend.  Second, hard assets and arable land could be socialized so no one person "owns" them.  Property rights to ownership could be eliminated.  Also, without money it gets quite hard to quantify "wealth".  So PY is essentially correct here, because after the "Last Crash" of the monetary system there won't be any trading going on at the floor of the NYCE or any other bourse.

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Offline Golden Oxen

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Re: Big Slide v2.0 Begins
« Reply #473 on: March 01, 2018, 05:54:17 AM »
Quote
GO: Of course there are always rare exceptions to the rule.

Yes, one exception being the Last Crash, after which there are no investment positions ever again.

If speaking for yourself, fine.

Long time investor here and many of my associates do not agree.

That's what makes a market. I will stand by my original statement.
                                                                                                      Thanks for your input, GO

Offline Eddie

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Re: Big Slide v2.0 Begins
« Reply #474 on: March 01, 2018, 07:31:28 AM »
Not so. The Last Crash will just cause a major shift in wealth from digital assets and money, to hard assets and arable land.

First off, you can only "own" what you can protect & defend.  Second, hard assets and arable land could be socialized so no one person "owns" them.  Property rights to ownership could be eliminated.  Also, without money it gets quite hard to quantify "wealth".  So PY is essentially correct here, because after the "Last Crash" of the monetary system there won't be any trading going on at the floor of the NYCE or any other bourse.

RE

No, it'll all go local, and whether property right will be important is unclear. I expect different solutions in different places. I do expect the current system known as "rule of law" to persist for the immediate future after "The Last Crash". In fact the stock and bond markets themselves might persist, although they will become increasingly irrelevant.

Wealth is easy enough to quantify. It's anything you can trade for food and shelter and medicine and expert help of any kind. The price points and mediums of exchange will have to find their new normals.

The term "become socialized" is a euphemism for one of two things. It could mean wealth is shared as a gift. It could mean wealth is stolen by somebody with the ability to use force. Whether either happens and who it happens to has to do with how easy or how hard it is. It's always easy to steal from the weak. Not so easy to steal from the prepared. Those who are unprepared will have no wealth to share. Those who are at least have the option.

Dying to protect one's and is a time honored tradition, and one I'd be happy to go out that way. It won't come cheap in my case. I understand asymmetric warfare well enough, and have the skills to kill lots of hungry zombies.

Collectives are not likely to emerge as top-down solutions. Our own efforts toward promoting collectivism have miserably failed in the best  of times. That's what the Diner and SUN have proved. It won't happen after afresh collapse. It might emerge as an organic local solution, over time. That's always been my view, and our experiences over the past five or six years haven't changed my view, but rather cemented it more firmly.
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Online RE

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Re: Big Slide v2.0 Begins
« Reply #475 on: March 01, 2018, 08:07:25 AM »
Not so. The Last Crash will just cause a major shift in wealth from digital assets and money, to hard assets and arable land.

First off, you can only "own" what you can protect & defend.  Second, hard assets and arable land could be socialized so no one person "owns" them.  Property rights to ownership could be eliminated.  Also, without money it gets quite hard to quantify "wealth".  So PY is essentially correct here, because after the "Last Crash" of the monetary system there won't be any trading going on at the floor of the NYCE or any other bourse.

RE

No, it'll all go local, and whether property right will be important is unclear. I expect different solutions in different places. I do expect the current system known as "rule of law" to persist for the immediate future after "The Last Crash". In fact the stock and bond markets themselves might persist, although they will become increasingly irrelevant.

Wealth is easy enough to quantify. It's anything you can trade for food and shelter and medicine and expert help of any kind. The price points and mediums of exchange will have to find their new normals.

The term "become socialized" is a euphemism for one of two things. It could mean wealth is shared as a gift. It could mean wealth is stolen by somebody with the ability to use force. Whether either happens and who it happens to has to do with how easy or how hard it is. It's always easy to steal from the weak. Not so easy to steal from the prepared. Those who are unprepared will have no wealth to share. Those who are at least have the option.

Dying to protect one's and is a time honored tradition, and one I'd be happy to go out that way. It won't come cheap in my case. I understand asymmetric warfare well enough, and have the skills to kill lots of hungry zombies.

Collectives are not likely to emerge as top-down solutions. Our own efforts toward promoting collectivism have miserably failed in the best  of times. That's what the Diner and SUN have proved. It won't happen after afresh collapse. It might emerge as an organic local solution, over time. That's always been my view, and our experiences over the past five or six years haven't changed my view, but rather cemented it more firmly.

Well, "your thinking" and "cement" is a tautology.  A reverse oxymoron when used in the same sentence.  :icon_mrgreen:  I can think of some other synonyms here.  Intransigent, rigid, stubborn, pig-headed 🐷...lol.

There are two classes of Diners.  There are the POOR ones who would like to get together to share and help each other.  Except they got no $MONEY$ to get going.  Then there are the RICH ones who want to go it alone and keep what they got.  SUN☼ hasn't been successful to date because we can't seem to find a way to bring these two classes of Diners together.  :(

RE
« Last Edit: March 01, 2018, 08:15:39 AM by RE »
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Offline Eddie

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Re: Big Slide v2.0 Begins
« Reply #476 on: March 01, 2018, 09:53:05 AM »
There are two classes of Diners.  There are the POOR ones who would like to get together to share and help each other.  Except they got no $MONEY$ to get going.  Then there are the RICH ones who want to go it alone and keep what they got.  SUN☼ hasn't been successful to date because we can't seem to find a way to bring these two classes of Diners together.  :(


I'm doing what I'm doing because I'm dug in in a lot of ways and it's too hard to make a geographic change. It would be highly disruptive and, I believe, contrary to the best interests of myself and my family. Otherwise I'd strongly consider moving in somewhere near Peter or David. Or you, although I'd favor the panhandle for AK, I think, over the Mat-Su. Not that Mat-Su is bad. It's way above average.

I have made many long term financial decisions, and they are working out well enough, so far. Survey says sit tight. You're welcome to live on my place. I have land and lots of projects and a roof if you need one. But you're better off where you are, I think, at the moment.

It has been my observation that there are no truly poverty stricken Diners. They are all making their way, and the ones I know are pursuing exactly what they've chosen. None of the ones I know have really seriously sought out a collective living situation other than Knarf, and his has not endured, although he's tried hard to keep it going.

SUN is a great idea, but it takes money to buy stuff, and nobody I know has managed to pool their resources well enough to pull it off. Donations are not forthcoming.
« Last Edit: March 01, 2018, 10:36:28 AM by Eddie »
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Online RE

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Re: Big Slide v2.0 Begins
« Reply #477 on: March 01, 2018, 01:32:47 PM »
Donations are not forthcoming.

We got a nice one this year.  In the quadruple digits.  :icon_sunny:  It's a start.

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Offline Eddie

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Re: Big Slide v2.0 Begins
« Reply #478 on: March 01, 2018, 01:50:04 PM »
Good. It's a worthy cause. I have donated beer, Don't forget that.
What makes the desert beautiful is that somewhere it hides a well.

Online RE

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Re: Big Slide v2.0 Begins
« Reply #479 on: March 01, 2018, 01:55:15 PM »
Good. It's a worthy cause. I have donated beer, Don't forget that.

I'll have a Tooth inscribed on my Tombstone to honor your Gift of Beer.

Now that we have some donations and money in the bank and a full Tax Return, I can start applying for matching grants.  Never quit.

SE Alaska is nice, but like where Peter is no good farmland.  Rains too much and all the nutrients get washed from the soil.  Mat-Su has good farmland.

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