Wednesday, June 19, 2013

Prayer for the Day

Prayer for the day -

Our Ben,
Who art in heaven,
Hallowed Be-nanke,
Thy auctions come,
Thy Bill's be done,
In Twos as they are in Sevens,
Give us this day our daily Fed,
And forgive us our Treasuries,
As we forgive those that default against us,
And lead us not into recession,
And deliver us from deflation,
For thine is the borrowing, the easing, and the printing,
For ever and ever.

We first posted here :- Order of Service, but so apt for today we had to reuse.


amplitudeinthehouse said...

Money lost , nothing lost , Confident lost , everything lost...
.and there's no way I'd be prepared to trade in the size that is expected IN THIS MARKET without full , money isn't all the same , when one is putting themselves infront of the steamroller, that money has the third of PlatoS varibales...


talbakken said...

and So, Hilsenrath is St. Peter?

Anonymous said...

Detapering Partners LLC pregnant with bonds of all sorts, ready for maximum pain if Ben doesnt squash that 5y yield today.

Elsewhere, not involved, but that USDJPY 95 expiry is going to be interesting no matter what, innit?


Leftback said...

I'm with you on bonds, DD.

Some geniuses seem to imagine that Bernanke is going to sit at the table and go "OK, you lot. Let's just taper significantly starting today and then we can watch 30y fixed go airborne by 100 bps, kill the US housing market for the rest of the year, precipitate a US recession and f**k up our balance sheet at the same time. What do you think, Dick? How about it, Kochie? That would be fun wouldn't it, Janet?".

Mr Market, for his part, is often all too happy to give a rude rodgering to excessively large groups of shorts. As of this moment, the most attractive cluster of pink flamingoes is probably the Treasury shorts, already panting like rabid dogs on a hot afternoon in the streets of Macondo...

Leftback said...


Always a great day to do nothing, this one more so than most. Pennies and Steamrollers....

abee crombie said...

Not loving where 30yr is sitting going in BB. A little worried with my AGNC.

Kinda surprise the BRL is holding in here, given the 'movement' going on there (occupy wall street meets Rodney King, IMO)

Anonymous said...

mid 2014!!

why does Ben always sound like a nervous middle-schooler when he talks?

That's rhetorical, btw.

abee crombie said...

EM taking it on the chin. I guess the carnage still needs to take some ppl out. Oh boy

Thanks for the higher mortgage rate too, bb... meh

Anonymous said...

So basically it's Gundlach and Gross versus the World?


Anonymous said...

Well, this wasnt the expected result, to say the least.

Am I the only one to have found this to (still) be dovish.

We'll keep pressing. But this is really uncomfortable.


Leftback said...

It seems like a lot of people were set up to Sell The News, irrespective of what the News was.

On the whole it was a good day to be Bashing Betty, which has been a vain pursuit for us these last few weeks. Even the mighty Euro slipped from its perch.

The EM slaughter is surely reaching its climax for the time being? Still think there is going to be a very nasty snap back in quite a few instruments next week as vol sellers return to the fray. Right now a lot of punters are content to limp into expiration.

abee crombie said...

maybe most brl and mxn punters were watching football, but the currencies took it hard in the afternoon. I want to jump in but technically, the charts look they can easily go higher from here.

So i'll wait. Maybe TSY's snap back but I doubt it

I didnt see the remarks as bearish but whatever, MBS clobbered as well. Wake up S&P, this isnt good

Leftback said...

Some will see this as an opportunity to buy MBS and the REITs who love them. Weaker data out of China overnight, so there would likely be no shortage of buyers of MBS on weakness.

It was another good Fed day to not be trading like a headless chicken. Our FX punts this week were an attempt to hedge a knee jerk surge in the USD and that's working out well, even if the bond market reaction is a bit of a mystery. Participation by non-traditional players (read: HFs shorting Ts) seems a likely explanation. But as we all know that trade is a short term influence.

Anonymous said...

Having had the chance to sleep this off, we now understand what has been puzzling us. So if anyone in the TMM community has any thought on the following, we'd be grateful.

Why do we have higher real yields (the part we were right on, and where our higher $ bias did produce results) with a *flatter*, not a steeper curve (the part we are flat our wrong on, and are being taken out to the woodshed PnL wise).

We would expect something like Reverse Twist to happen *before* hikes (growth being priced on the long end, while the short end remains anchored)

We still think the market is getting way too excited about the timing and pace of hikes, but we have been wrong on this so far, and are very willing to hear if anyone has more coherent thoughts on this than we have.


Anonymous said...


Hussman spent some time musing about tapering and the pace of rates increases. He basically says that rates will be raised quite a while after QE has ended and backs it up with historical data, as usual. Have a look, maybe it helps.

Hussman weekly market comment June 17, 2013

Anonymous said...

C Says
I'll take the simple explanation ,the punchbowl moment.
Whatever economic data the central banks are playing off 2008 is far too recent to allow themselves to be caught offside and accused of building the next bonfire. Psychology dictates they will protect their backs with the punchbowl trick. Even if it is more talk than action.

Hotairmail said...


I would say that Bulls tend to continue as near term rates rise (longer term rates tend not to move around so much). i.e. a flatter yield curve tends to materialise step-wise with policy tightening, until we eventually tip over into inversion.

The strange thing about this bull is how low near term AND longer term rates have been. If longer term rates fail to shift upwards, we could trip into inversion and all that means at much lower rates than previously. In the mean time, I would say gradual flattening indicates ongoing bull.

As to the 'why', I think it basically reflects overall indebtedness. Monetary policy is much more sensitive these days such that absolute rates can remain low and be played around with at much lower increments. You could posit that means the potential for deflation is very great.

stockcharts graphic. Click on the 'animate' button.

Anonymous said...

C Says
I also think it's overdue. The spreads have become ridiculous as people have become starved of yield they have clearly overreached and allowing that to go ever further would be indefensible. The HY;Junk;Emerging Sov etc have become evermore ripe and you only have to look at the fund moneyflows to see where it is coming from. Same old,smae old,too much money chasing too few, real, worthwhile opportunities.

abee crombie said...

Well said C, too much money chasing too few opportunities. But has that picture really changed? Probably not, but now everyone in EM land is worried about return of principal not return on.

Risk off is back, IMHO

However hated EM bonds are now, and I think the trade is to short them, fundamentally their value is looking more appealing. High rates and even though their economies are doing worse I think default risk is still very low. Issuance was high in the past few years but I dont think we see the dollar funding crisis of the past (could be wrong). And plus EM policy rates will likely move lower. However for the EM bond investor the major influence has always been FX. Near term its ugly but at some point there will be very good value there.

The world is still awash with $$.