Looks like we are setting up for another bond panic here. The 10 year yield refuses to drop below 2% and the German Bund got destroyed today, going up 16 bps to 0.71%. The volatility in the Bunds are extraordinary. It is not common for bonds to move more than 7-8 bps in a single day, but those long Bunds have been panicking when things go downhill.
It looks like we could test 2.40% sometime this month, as the Fed rate hike fears and Bund weakness combine to cause a risk off scenario for fixed income investors. I am not going to short to try to capture that move, as the short bond trade is a little too crowded for me. If we do get that bond panic, it should set up a great long term buying opportunity for bonds.
S&P remains untradeable, and seems like there are still too many bears for my liking to take a shot on the shorts.
Subscribe to:
Post Comments (Atom)
Posts
No comments:
Post a Comment