Friday, June 26, 2015

No One Wants Bonds

The price action in bonds this week has been extremely bearish.  You had the S&P weak the last few days and the bonds are still selling off.  Every bad Greece headline has caused a small spike that has immediately been sold off in bonds.  And today, Bunds are leading the charge, and taking Treasuries down with the ship.  Apparently no one wants to be be long ahead of a Greece deal announcement, which seems like an inevitability now.  Plus you have nonfarm payrolls coming up next Friday, which I am sure bond traders will not want to be long in front of.  So you have the start of another bond panic, this time it looks to be more sustainable and could take yields up to 2.60%, which would be an exquisite buying opportunity IMO.  But before we get there, the market has to panic some more.  It could get ugly next week if we breakout above 2.50% 10 yr yields.

Neutral on stocks here, but will entertain a dip buy if we can have one more down day.

2 comments:

Unknown said...

just a note that nonfarm payrolls is out on Thursday due to the holiday.

Market Owl said...

Yes, so it looks like we started the pre-nonfarm payrolls/ pre-Greece deal selloff already. Might get an up day early next week due to month end extensions in bond land and then down again on July 1, day before NFP.