The collision of global markets and social mood

Tuesday, May 12, 2015

Tuesday -- More Troubles In Bond Land

ES Futures:
Down hard on sovereign bond hiccups.

News:
Overnight the markets have shown that when bonds rumble, Japan is a catalyst. Using charts from Bloomberg, Zero Hedge illustrated that today's 10-yr JGB auction was the weakest since Feb 2009, with the lowest bid-to-cover ratio since since then.

10-yr JGBs saw the biggest absolute jump in yields in 2 years, and 30-yr yields were at 2-month highs.

From there, treasury yields around the world spiked with German Bunds being the worst hit. Even Norway got hit.

Once again, with central bankers maniacally pretending worldwide, bond markets are a great early warning indicator. Yesterday's action in US 10s and 30s was ominous.

Ignorance reigns. This was overheard yesterday by Tim Backshall (@credittrader):

"I mean why else are rates going higher... apart from the economy doing better?"


FX:
USD is edging closer to the 93.16 Fib extension target, and its ROC (rate of change) is slowing. EUR is edging higher. JPY is stronger on higher yields (bad sign).

Treasuries:
Yesterday's spooky action may have been the tip off that things were about to get ugly in Bond Land.

Energy:
WTI crude is well bid but looks to have come off its recent highs impulsively and appears to be rallying correctively, which implies lower soon. This week could be a welcomed test of recent highs.

NG is the opposite for now.

Metals:
Gold up . . . to 1193.

S&P Outlook:
Viewing this current pullback as a buy unless 2039.69 breaks. As bad as things look in Bond Land, it does not seems to be the Big One yet.

The pullback in the S&P is expected due to its failure to exceed 2120.95. The wave structure still suggests news highs, however, there is a 1:1 Fib extension target at 2059.67 that I would view as a last buy area, but am doing so against a far larger UVXY position.

No comments:

Post a Comment