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B4 the Bell Humpday April 20, 2004


Guest yobob1

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4455 is an inflection point on the 10year yield (tnx). this is the point at which the carry trade becomes attractive and hedge funds start to feel pain on the capital leverage. Not sure who will win thsi battle. May take a few days on the line.

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Rog: Could you eloborate on the carry trade becoming attractive? I thought that was the most crowded trade on the planet? My guess a 70bp back up in yyld ( 10s) would be causing some serious pain?

Soup.

 

4455 is where a good deal of the carry trade was put on last summer when bonds started to melt. Why is this number special, I don't know. But my contacts tell me there is good demand for a double down type bet at that number.

 

Of course there are alot of people underwater on this trade who didn't catch the spike. Also above this level hedge funds need to pay more to maintain there leverage.

 

So the double downs will try to push rates back down, while the hedge funds and carry trade losers may drive rates up. the mortgage hedgers are a wild card. Who wins is the question. Iam just suggesting that this number is important.

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Humor break :)

 

 

Walking through the woods a man comes up to another man hugging a tree with his ear firmly against the tree. Seeing this he inquires, "Just out of curiosity, what the hell are you doing?" "I'm listening to the music of the tree."

 

"You gotta be kiddin' me."

 

"No, would you like to give it a try?"

 

"Well, OK..." So he wraps his arms around the tree and presses his ear up against the tree. With this the other guy slaps a set of handcuffs on him, takes his wallet, jewelry, car keys, then strips him ass naked and leaves. Two hours later another nature lover strolls by, sees this guy handcuffed to the tree, stark ass naked, and asks, "What the hell happened to you?"

 

He tells the guy the whole story about how he got there.

 

While he was telling his story, the other guy shakes his head in sympathy, walks around behind him, kisses him behind the ear and says .....

 

 

 

 

 

"Ya know, Sweetheart, this just ain't your day."

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