Today May Be The Day That Long Bond Yields Peak; Equities May Rally Further, However

Summary

Let's see if the Masters of the Universe (Primary Dealers) finally lets up on bond yield push higher. Today may be THE DAY the long bond peaks on liquidity outflows.
Just be on guard however. Pre- or early NY trade may see them give the long bond yield another kick-in the backside. PAM unwinds the long TMVs before auction time.
There should be limited scope for yields to go higher after today's auction. Once the MOTUs have the securities, they will want to sell at a higher price (lower yield).
Also, the MOTUs will be paid on Monday by the Treasury for the $55Billion paid down by the Treasury as announced yesterday. You can be sure the Primary Dealers will be "encouraged" to use that money to buy long term securities. There is limited scope for yields to rise further, at least over the next two to three weeks

FEBRUARY 17, 2021

GOOD MORNING EUROPE / GOOD EVENING WEST COAST

robert.p.balanModeratorLeaderOwnerFeb 17, 2021 9:06 AM

It is long bond auction day today.

Let's see if the Masters of the Universe (MOTUs, Primary Dealers) will finally let up on the long bond yield push higher. Just be on guard however -- pre- or early NY trade may see them give the long bond yield another kick-in the backside.

PAM will unwind the long TMVs before auction time closes at 1;00 PM EST today.

The cash 10yr yield provides a case for a higher high in yield . . . . but the TN futures suggest we may have seen the trough (in the futures).

*Conclusion* -- there is limited scope for yields to go higher after today's auction. Once the MOTUs have had the securities, the will want to sell at a higher price (lower yield).

There won't be any long bond auction (10s and 30s) until March 10 and March 11.

robert.p.balanModeratorLeaderOwnerFeb 17, 2021 9:11 AM

Also, the MOTUs will be paid on Monday by the Treasury for the $55Billion paid down by the Treasury as announced yesterday. You can be sure the Primary Dealers will be "encouraged" to use that money to buy long term securities. There is limited scope for yields to rise further, at least over the net two to three weeks.

That is, until auction time comes again, and the MOTUs will play that same up-with-yields game again.

spitzbubchenFeb 17, 2021 9:42 AM

Robert, what is your outlook on GC? I notice that you have left the long contracts exposed.

robert.p.balanModeratorLeaderOwnerFeb 17, 2021 9:51 AM

Too late to respond, but with yields looking to come down some, there will be more room for DXY to come down, and gold higher. Watching it carefully.

gdflondonFeb 17, 2021 10:16 AM

GM Robert. I put a short hedge in place on GC when we dropped below 1805. Do you have a target on where gold may bottom and where it may make sense to lift short hedges? Thank you.

robert.p.balanModeratorLeaderOwnerFeb 17, 2021 10:33 AM

Look like limited room for DXY upside. When DXY moves lower, that the time to lift the Gold short hedge.

robert.p.balanModeratorLeaderOwnerFeb 17, 2021 10:37 AM

all PAM SELLS 288 CONTRACTS DXH1 AT DOWNWARD BREACH OF 90.50 -- GCT -- FOR ALL FUNDS, INCL TRACKER AND EIGER

john.derFeb 17, 2021 12:01 PM

A little confused by the DXY outlook, Robert. Is this a scalp of the most recent trade? Is your outlook now that DXY makes a lower low in the near term?

robert.p.balanModeratorLeaderOwnerFeb 17, 2021 12:56 PM

Probably a wave 5 of the large irregular John. I may have bought too soon.

Looks like a final uptick in yields -- which should be be good for the long TMVs.

That may trigger a final downtick in equities. We look to buy this dip if it happens.

Yields may be topping but be on the lookout for a day or so of equity outperformance if that happens.

visceral1Feb 17, 2021 1:12 PM

Hello, I hope you are doing well. Do you still feel there will be a decline in bitcoin and crypto this month?

robert.p.balanModeratorLeaderOwnerFeb 17, 2021 1:24 PM

Mr. V -- we are waiting for a pullback to reset bitcoin longs offloaded in early Jan. If yields fall, then we might just see some respite from the risk-on environment, probably allows cryptos to pullback.

visceral1Feb 17, 2021 1:46 PM

gandhik1Feb 17, 2021 2:27 PM

gold is getting pummeled. any relief in sight?

robert.p.balanFeb 17, 2021 3:44 PM

We should have relief when yields start to fall Mr. Gandhi.

flytightFeb 17, 2021 2:31 PM

GC falling hard along with TN. The Boys are busy at work. That means yield is rising.

flytightFeb 17, 2021 2:43 PM

robert.p.balan GM Robert Your explanation of how and why yields move the way they do over the last two days is a Godsend. Just love the time you took to educate all of us on better understanding the TIMING that goes with it and WHY. I will now trade TN along side you when you buy next. Thank you so much.

robert.p.balanFeb 17, 2021 3:43 PM

Thanks a lot for the confidence, mate!

Yup, the MOTUs are ramping up the long bond yield one last time before the auction ends at 1:00 pm EST today.

Its time to exit the long TMVs.

robert.p.balanModeratorLeaderOwnerFeb 17, 2021 3:00 PM

all PAM SELLS $250k OF TMV AT 68.9 LIMIT OR BETTER OR AT BREACH OF 68.2 -- FOR ALGO FUND ONLY.

rcmaiFeb 17, 2021 3:02 PM

Respectfully to all, please be mindful that this room is for Trading/Robert's commentary. We have community nexus for your general commentary and we try to keep chatter in this room to a minimum so that it is easier for everyone to follow. Thank you

robert.p.balanModeratorLeaderOwnerFeb 17, 2021 3:54 PM

Today may be THE DAY the long bond yield peaks. A perfect confluence of liquidity outflows.

robert.p.balanModeratorLeaderOwnerFeb 17, 2021 4:00 PM

Not a good fill.

PAM SELLS $250k OF TMV AT 68.9 LIMIT OR BETTER OR AT BREACH OF 68.2 -- FOR ALGO FUND ONLY.

*This order was filled.*

*TMV -- DONE AT 67.90 -- SOLD $250k TMV FOR THE ALGO FUND. *

robert.p.balanModeratorLeaderOwnerFeb 17, 2021 4:43 PM

The YM bottomed where we expected to see support. Lets initiate a long scalper, and see what happens.

all PAM BUYS 144 CONTRACTS OF YMH1 AT 31,375 LIMIT OR BETTER, OR T BREACH OF 31,490, FOR ALL FUNDS INCL TRACKER AND EIGER

robert.p.balanModeratorLeaderOwnerFeb 17, 2021 4:56 PM

PAM SELLS 288 CONTRACTS DXH1 AT DOWNWARD BREACH OF 90.50 -- GCT

Modify to:

all PAM MODIFIES THE SELL THRESHOLD OF DXH1 TO 90.75 (FROM 90.50) -- ALL FUNDS

The lead of the bond yield is giving me more confidence to go long.

robert.p.balanModeratorLeaderOwnerFeb 17, 2021 10:53 PM

GN gals/guys- See you in Asian trade-

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