Friday, March 6, 2015

Bond Market Massacre

This is going to leave a mark.  The Fed fear trade is now officially here.  The fear of the Fed rate hike.  Paul Tudor Jones said to short bonds 3 months before a rate hike.  Well, with this blockbuster NFP number, even though wage growth is weak, will get the bond fund managers in a panicky mood, ahead of the FOMC meeting in two weeks.  It is almost guaranteed that the Fed will remove the patience language from their statement, and now it seems like there is a lot of expectation for a June rate hike.

I tried to buy the dip in Treasuries this morning but took a loss as the market kept going lower and lower.  I will be back to try to play this Treasury market from the long side, but probably wait till Monday to buy.  It will be a panic Friday in the bond market as no one wants to be long for the next few months.

Today reminds me a bit of the July 2013 nonfarm payrolls report that killed bonds.  I will BTFD in Treasuries, just waiting for a bit of a bigger dip.  Levels I am looking at are 2.25% 10 yr and then 2.30%, and huge support around 2.40%.


Anonymous said...

Still looking to get long the JPY here? or payrolls changed the view"?

Market Owl said...

Waiting for later this month to get short USDJPY. I think this will be a monster trade once the setup is there. Still a bit too early. Looking for 124-125 as a possible strong resistance zone for USDJPY. Will look to short around there.

Market Owl said...

I would rather play the USDJPY. I guess euro is a buy around parity, if it gets there. It's not really an interesting play for me here.