The Bund Storm

The Bund dropped another 17 bps today.  That is a 34 bps move in 2 days, going from 54 to 88 bps on the 10 yr Bund.  These are mythic moves.  This is wrecking the global fixed income world, with 10 yr yields testing the YTD highs of 2.36% today.  It looks tempting to buy the dip because it worked so well in May, but the problem here is that there is a nonfarm payrolls report coming out on Friday, and I have a feeling that we will get a strong number considering the low jobless claims numbers in May.  Trimtabs is predicting a 273K nonfarm payrolls number for Friday.  They have been wrong often, but they get the general trend correct, and it still shows strong jobs gains despite slowing GDP.  You can thank McJobs for that.

Despite the big selloff in bonds, the action the past few months show how tough it is being a bond bear.  You get paid on a long term short position maybe for two months out of the year.   And it usually happens all at once, so if you aren't on the bear train, or jump on midway (tough to do in fast moves), you miss it for that year.  And then it is Chinese water torture for the next 10 months as yields drip lower and also have to pay carry to hold the position.

It is almost time to put on a long term position in Treasuries, I am waiting till after the nonfarm payrolls number and would like to get in closer to 2.45-2.50% 10 year yields.  These are interesting times in the bond space, quite the contrary to the dull trading in S&Ps.