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My Guess About Bonds, For What It's Worth 1/19/22

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Well, I've been warning about this horseshit bond market for 18 months or so, and that's been the correct stance. After all, in March 2020 the 10 year hit 0.5%. It got back there in July and August 2020. This morning, it almost ticked 1.90. I have little doubt that it is headed much, much higher.

If you own long bonds, you'll be destroyed. That's my guess. Look at the 20 year bond ETF, TLT. In March 2020 it hit 180. It sold off, but got back to 170 in July and August 2020. That's about the time I started shaking my fist at the moon on the bond market. The TLT traded at 139.79 in the pre market in NY. Folks, these are bonds. They're down 22%. And it's only the beginning. Whoa whoa whoa oh oh oh oh oh oh oh. 

Potatohead asked:  

12 hours ago, potatohead said:

Lee

any thoughts on Goldman Sachs loosing $500 million last quarter? Is this due to the RRP and lack of FOMC supporting the primary dealer markets? Basically money is not turning over in RRP, just sitting.

Let's not overcomplicate things. Goldman probably isn't holding much RRP or cash. That's not what they do. They're dealers.  They buy and sell.  Most of the RRP holdings are money market funds. That money is sitting. That's what MMFs do. They sit in short term paper. 

The simple fact of the matter, as I've been covering in my Primary Dealer updates once every 6 weeks or so, is that they've had record net long bond positions, extremely leveraged, for the past couple years (I plan an update on that this weekend). They've been the walking dead, merely fronts for the Fed, strawmen, so to speak. They've reduced those long positions materially in the past 6 months, but they are still net long. So they're taking it up the ass as this goes on. They need to get out, and now the Fed isn't going to let them out. 

Dis gone end badluh. 

Here's the TLT chart to yesterday's close. A bit lower still this morning. The 1 year cycle projection and the conventional measured move target of the current pattern breakdown is 127. That'll force bloody stools if it happens. 

tvc_38262c333c624af056a5a21dee69b987.png

 

As for the hourly ES, S&P futures at 7 AM NY Time, they hit a big sport level at 4550, and broke the 5 day cycle projection of 4555 a few hours ago overnight. Now they're back to resistance at 4590, with hourly oscillators for the 2-3 and 5 day cycles on the buy side. But they need to clear 4600 to really get it going on the upside. 

tvc_26815aa818697305b1acc61bf4286cf3.png

 

Meanwhile, Buttcoin manipulators are still trying to make it look like it's bottoming. I don't believe it. The 6 month cycle projection now looks like 34,000. Of course, if they break 39k, the measured move objective would be 10K. I think it's going to a singularity, but what do I know?

As for my beloved Euro, To hedge, or not to hedge, that is the question. 

This chart goes back 12 years. What do you think? Should I load up on euros now, or just wait until I buy my apartment this spring? And use cash, or lever? 

tvc_fcfe076b55fec005c0bff11e4c6f66aa.png

 

And now (Paul Harvey voice) the rest of the story:

Getting Short Up the Wazoo

Still Looking for that Rigor Mortis Rally

Fed Will Administer Volckera to Cure Inflation Pandemic, and We’ll All Die

What the Signs of Emerging Gold Would Be

Wheels Are Moving in Slow Motion for the Top

 

If you are a new visitor to the Stool, please register and join in! To post your observations and charts, and snide, but good-natured, comments, click here to register. Be sure to respond to the confirmation email which is sent instantly. If not in your inbox, check your spam filter.

 

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  • DrStool changed the title to My Guess About Bonds, For What It's Worth 1/19/22
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2 hours ago, DrStool said:

Well, I've been warning about this horseshit bond market for 18 months or so, and that's been the correct stance. After all, in March 2020 the 10 year hit 0.5%. It got back there in July and August 2020. This morning, it almost ticked 1.90. I have little doubt that it is headed much, much higher.

If you own long bonds, you'll be destroyed. That's my guess. Look at the 20 year bond ETF, TLT. In March 2020 it hit 180. It sold off, but got back to 170 in July and August 2020. That's about the time I started shaking my fist at the moon on the bond market. The TLT traded at 139.79 in the pre market in NY. Folks, these are bonds. They're down 22%. And it's only the beginning. Whoa whoa whoa oh oh oh oh oh oh oh. 

Potatohead asked:  

Let's not overcomplicate things. Goldman probably isn't holding much RRP or cash. That's not what they do. They're dealers.  They buy and sell.  Most of the RRP holdings are money market funds. That money is sitting. That's what MMFs do. They sit in short term paper. 

The simple fact of the matter, as I've been covering in my Primary Dealer updates once every 6 weeks or so, is that they've had record net long bond positions, extremely leveraged, for the past couple years (I plan an update on that this weekend). They've been the walking dead, merely fronts for the Fed, strawmen, so to speak. They've reduced those long positions materially in the past 6 months, but they are still net long. So they're taking it up the ass as this goes on. They need to get out, and now the Fed isn't going to let them out. 

Dis gone end badluh. 

Here's the TLT chart to yesterday's close. A bit lower still this morning. The 1 year cycle projection and the conventional measured move target of the current pattern breakdown is 127. That'll force bloody stools if it happens. 

tvc_38262c333c624af056a5a21dee69b987.png

 

As for the hourly ES, S&P futures at 7 AM NY Time, they hit a big sport level at 4550, and broke the 5 day cycle projection of 4555 a few hours ago overnight. Now they're back to resistance at 4590, with hourly oscillators for the 2-3 and 5 day cycles on the buy side. But they need to clear 4600 to really get it going on the upside. 

tvc_26815aa818697305b1acc61bf4286cf3.png

 

Meanwhile, Buttcoin manipulators are still trying to make it look like it's bottoming. I don't believe it. The 6 month cycle projection now looks like 34,000. Of course, if they break 39k, the measured move objective would be 10K. I think it's going to a singularity, but what do I know?

As for my beloved Euro, To hedge, or not to hedge, that is the question. 

This chart goes back 12 years. What do you think? Should I load up on euros now, or just wait until I buy my apartment this spring? And use cash, or lever? 

tvc_fcfe076b55fec005c0bff11e4c6f66aa.png

 

And now (Paul Harvey voice) the rest of the story:

Getting Short Up the Wazoo

Still Looking for that Rigor Mortis Rally

Fed Will Administer Volckera to Cure Inflation Pandemic, and We’ll All Die

What the Signs of Emerging Gold Would Be

Wheels Are Moving in Slow Motion for the Top

 

If you are a new visitor to the Stool, please register and join in! To post your observations and charts, and snide, but good-natured, comments, click here to register. Be sure to respond to the confirmation email which is sent instantly. If not in your inbox, check your spam filter.

 

looking forward to your report. GS was not the only one taking a nosedive recently. Your analysis makes sense. This is more widespread and certainly not talked about.

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1 hour ago, sandy beach said:

The January 31st Micro 2-year treasury note yield futures (2YY) were up 8% at the close yesterday, now down 2.89%. This is chaos.

2yy.png

Wow. That's nuts. Why would anyone be buying like that? 

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18 minutes ago, DrStool said:

Still no projection below 4550 on the 2-3 or 5 day cycle. 

Well, that fixed that, didn't it. Latest 5 day cycle projection 4510. 

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