Tuesday, November 07, 2006

Late post! Sold more Bund futures...yesterday:

Just to keep all positions posted...I sold another £10/tick of Dec Bund futures at 117.43 yesterday, increasing my short to £20/tick at about 117.75 average...shame really, its up 45 ticks today to 117.82 unfortunately!
 
Never mind, this one is all about the long-term. No way 10y Bunds can hold onto 3.75% with the ECB on a rate hiking cycle. It's going to be just like the Treasury market last year, where they NEVER priced enough into the curve...I remember (and posted at the time) Bill Gross talking earlier this year about how good value the Treasury market was, around the time the new 30y came at 4.50%, well that bond preceded to PUKE 11 points lower in short order (as I had predicted at the time)....now, Bill Gross is up about 2.40% Year-to-Date, he'd have been as well sitting in cash! And now he's telling us he sees 10y Bunds going to 3.60%. I mean really...base rates are at 3.25%....growth is in place....inflation risks are there...unemployment has only JUST started falling, it's only just under 10% in Germany, it can drop a LONG way from here...would rates at 3.50% cool the situation? 4.50%? 5.50%?? Maybe. Maybe not. But either way, I don't see the rate hike cycle stopping anywhere near current levels.
 
They are all morons, just trade with a view you are keeping stuff for 6 months, and most sensible trades will work out (although my DOW and S&P shorts are really hurting...REALLY hurting...!)

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