Heading into the 5pm "BOND TRADERS ARE NERVOUS ABOUT TOMORROW" marking period the FN 4.0 is -0-12 at 97-25 yielding 4.2279% and the FN 4.5 is -0-12 at 100-16 yielding 4.4415%. The secondary market current coupon is 4.388% and "rate sheet influential" yield spreads just gapped out against benchmarks!
Current Coupon vs. 10yr TSY = +93 basis points
Current Coupon vs. 10yr Swap = +75 basis points
Current Coupon vs. 5yr TSY = +201 basis points
Lots of reason to believe the 10yr will be testing 3.50% tomorrow. All week the 10yr yield has has pushed higher and higher in the range. What's going to stop momentum? WHY NOT TEST 3.50%?????
Below is an intraday FN 4.5 chart. Notice we are heading out the door near the lows of the day? This means sellers are controlling the market...this means the bond market is nervous about the day ahead.
WHY ELSE DO I SAY BOND TRADERS ARE NERVOUS ABOUT TOMORROW???
- GE EARNINGS
- BANK OF AMERICA EARNINGS
- MORE CONSUMER SENTIMENT DATA
- INDUSTRIAL PRODUCTION
- CAPACITY UTILIZATION
- THE TREASURY BUDGET
The recent trend has been " better than expected" earnings and econ
reports, the market is ready for that trend to continue tomorrow. Cross your fingers for crappy data...
I am preparing for the 10yr to test 3.50%. If it does, be ready for the FN 4.5 to feel the effects of PARNERTIA. Hello 100-00!!!
PS...the options market also says the market is ready for a move higher in rates. Puts were trading at a premium today. CHECK IT OUT
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