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  • #1,041
  • May 19, 2011 1:39am May 19, 2011 1:39am
Quoting Pipstrumpf
Possible answer to question about falling yield of US T - Bonds:

Greece:
Attachment
Yields surging and bond price going south, totally normal as investors have no trust into those bonds therfore demanding higher yields.
Not possible to print money therfore needs to raise money trough the EC.

US:
Attachment
Oops totally the opposite. Mmmhh strange ah yes the FED can print money till all the trees are gone from this planet.

Any T bonds bubble soon??

Cheers
Pipstrumph, printing money should be leading to higher yields not lower, so why is it not? Japan has printed plenty of money, people have called a bond bubble in Japan for 10 years now, people have been consistently burnt shorting Japanese long bonds over the years. This is an accident waiting to happen in Japan, and it will come before long, but it has not as yet.

I think there is a bubble in Government Bonds, and I am looking at far out of the money put options on the TLT ETF as a proxy to short the US long bond, but let let me state my position here. I think the US is on a fiscal and monetary train wreck, hence holding gold and silver and looking at sugar now over the long term. But I m focused on the next 6-18 months, or 12-24 months for the AUD. Yes over the next decade AUD should be fine, and go on to new highs. However, the trend in T-Bond yields is down, thats what price indicator and my trend indicators are saying. Despite all the printing, all the fears about the debt ceiling US T-Bond yields are falling. It might be a bubble, but bubble like conditions can last a few years remember.

Credit default swaps on OZ banks are rising, and are breaking to new medium term highs. Interest rates expectations are mis-priced in Oz. There is denial about the credit bubble in the real estate market. No central bank ever comes out and says we have a bubble in housing. I m still allowing for another possible break above 1.1015, but time is closing in on that possibility. Retail traders are busy building longs according to the data, while future traders are easing of their AUD longs. This is a sea change in sentiment, and is a symptom of a change that takes place at turning points.
Time will tell, but I have not even mentioned China in this equation, and I will say it again, being naked long the AUD is a very risky trade at this juncture.
  • #1,042
  • May 19, 2011 2:30am May 19, 2011 2:30am
Quoting VedantaTrade
Pipstrumph, printing money should be leading to higher yields not lower, so why is it not? Japan has printed plenty of money, people have called a bond bubble in Japan for 10 years now, people have been consistently burnt shorting Japanese long bonds over the years. This is an accident waiting to happen in Japan, and it will come before long, but it has not as yet.

I think there is a bubble in Government Bonds, and I am looking at far out of the money put options on the TLT ETF as a proxy to short the US long bond, but let let me state my position...
Time will tell, but mostlikley the monetisation of debt by authorities looking to use central banks (FED) purchases of government bonds to keep yields low may lead to weaker currency, higher inflation or both. Apparently PIMCO has reduced their holdings of US government bonds the same with China and I can only imagine if they smell a rat then there must be other "dead body's lying around in the cellar".
What do we have right now at present? The US $ is weak against CHF, AUD, EUR, Yen and so on goes the list.
In my view most people down under holding a mortgage will do whatever is required to service their debts, it is not the same as in the US were you just hand the keys in and who cares not my problem anymore.

Anyway to come back to FX the trend for the AUD is still up on all the long term charts and that is the direction to trade as long as the big boys see this the same way, having said that price right now is in the middle of nowhere.

Cheers and many pips
  • #1,043
  • May 19, 2011 2:52am May 19, 2011 2:52am
Quoting Pipstrumpf
Time will tell, but mostlikley the monetisation of debt by authorities looking to use central banks (FED) purchases of government bonds to keep yields low may lead to weaker currency, higher inflation or both. Apparently PIMCO has reduced their holdings of US government bonds the same with China and I can only imagine if they smell a rat then there must be other "dead body's lying around in the cellar".
What do we have right now at present? The US $ is weak against CHF, AUD, EUR, Yen and so on goes the list.
In my view...
Thanks for the reply. I think we are probably in broad agreement. And I guess it all comes down to time frame. Yes Pimco sold at the most recent yield high on their bonds, so old Bills timing wasn't great with that one, but he is a billionaire and is thinking over the next 20 years.
Over the long run the USD will be much weaker I totally accept, and yes the trend in AUD is technically still up. But I m looking at price action and macro fundamental themes. While I accept the trend is your friend and my systems look at trends, but I m also aware for the "bend at the end" as these offer the best risk/reward. But your right time will tell, and the reason we have a market is so we can disagree by placing trades, then debating them on forums,haha. Good luck also.
  • #1,044
  • May 19, 2011 3:23am May 19, 2011 3:23am
Hi, heres just my two cents. I'm not very sure about my fundamental sentiment as if yet. So I won't comment on it.

Heres a chart,

For intraday I'm looking for price to move towards 1.07000. I'm wanting to sell at this level for a lot of reasons.

Firstly, it looks like we're in a downward sloping triangle. More that 5/10 price moves downwards out of this kind of formation. Also, please note the 6th of May on your charts. This Daily candle had a lot of volume entering it, theres also a huge wick above it and it closed at 1.07004...

Also, this price happens to be in line with with three fib retracements. The 23.6 from (0.97851-1.10109) as well as the 50 from (1.08877-1.05045) and the 38.2 from (1.10109-1.05045). (I don't use all of them, just for illustration on larger time frames )

Also, the price, when it reaches this level, will be close to my daily channel, adding to the confluence.

I more bearish biased atm. However I do have longs from the support at 1.05045 still open, i'll leave a 1/8 open if we go through 1.07 with a little conviction. A close above 1.076 will signal a b/o to me and I'll scale in either straight away, or look for a pull back.

Any break of 1.0500 will kinda shout short, this support is solid which worries me. The fact that both the resistance and support is solid tells me the b/o will be hard and fast. Kinda worried about upcoming fomc minutes ect... too.

Good luck guys, comments appreciated.


Shadi~
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  • #1,045
  • May 19, 2011 9:12am May 19, 2011 9:12am
Quoting FX-Petra
Closed my 0510 long @ 0625. Still holding my 2 0702 long's. They have been open for over a week and have been drawing good intrest. Would be happy for any number above 0702 so I could close and just take that intrest money off the table. If so, that would make me flat AU, and for now that would be ok.

Regards,
Still waiting for price to break through 0700 to close my last 2 longs........

Would buy some more ahead of 0460.....

Regards,
  • #1,046
  • May 19, 2011 5:45pm May 19, 2011 5:45pm
These long legged hammers on the S&P are fairly typical of what happens when market is nearing exhaustion. Two scenarios -

a) S&P may head south on the twin hammers, and the USD head south too.

b) Market may push up to the 61.8 fib @ 1350.92 and trend line resistance before crashing.

It really is a coin toss what the majors will do when the bulls are out of puff - USD confidence is very low, as mentioned before, even if equities fall over, the USD may not be supported.

What is worth paying attention to, is that these long legged hammers indicate the market bears are warming up, sentiment can change in a heartbeat and turn very ugly, very quickly.

When market crashed last time, everything went south together - the swissy and cash were king.

Take care and good trading to all.
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  • #1,047
  • May 19, 2011 6:38pm May 19, 2011 6:38pm
I have to side with Pipstrumpf on the bond issue. The Fed prints money out of thin air; and buys T bonds. This supports the high price of T bonds and thereby keeps the yield low; since price and yield are inversely proportional. QE2 will end on June 30, and the FED will quit printing money and buying T bonds. The best way to prepare for the end of QE2 is to prepare for QE3 (and QE4). Therefore, we should not short T bonds, unless we think the Republicans can hold the line on the debt ceiling and let the US default on its T bonds; which seems unlikely given the number of wishy-washy Republicans in Washington.
The Greek central bank cannot print Euros; and therefore cannot buy Greek bonds. No one else wants to buy Greek bonds; because they think they may default. So the price of Greek bonds falls and yields go up.
Likewise the Japanese central bank can print Yen as long as the Sun rises, and buy government bonds to support the bond price and to keep yield low. Therefore, unless we want to fight the JCB, we should not short Japanese bonds either. http://www.forexfactory.com/images/icons/icon9.gif
  • #1,048
  • May 19, 2011 6:49pm May 19, 2011 6:49pm
Many mortgages in the US were given out with little or even nothing down. So we have renters who simply buy a house with nothing down; thinking monthly payments are the same as rent. If they get too far behind on the payments, they toss the keys to the bank and move into a lower priced rental unit, just the same as they would if they had rented the house and could not make the rent on time. Sometimes they even move into a nicer rental unit; since they let their previous house run down. http://www.forexfactory.com/images/icons/icon9.gif
  • #1,049
  • May 19, 2011 7:54pm May 19, 2011 7:54pm
Quoting evelee8
Portfolio updates:

Still holding long @ 1.0718
Short term trading - closed 1.0608 TP 1.0650 (+42 pips)

Outlook:
As expected - Sp downgrade Aus 4 major banks but it is not the worse.
The just announced MI inflation expect was down to 3.3.
Based on all the recent negative indicator - An early rate hike's probability has down to less than 10%.

Aiming on NAB statement on 1.04 - which aussie will hit by Q3.
Closed Long 1.0604 @ TP 1.0655 (+51 pips).
it is best to apply short term trading strategy now..
  • #1,050
  • May 19, 2011 9:15pm May 19, 2011 9:15pm
As usal trading right now is like watching paint drying.

Attached is a PDF for all those US$ bulls. Nothing new really but always interesting to test the fundamental side of a nation.

Attached File(s)
File Type: pdf 5-10-11bud.pdf   389 KB | 426 downloads


Cheers
  • #1,051
  • May 19, 2011 11:11pm May 19, 2011 11:11pm
http://www.theaustralian.com.au/busi...-1226059593204

"ROYAL Dutch Shell will today announce approval of its world-first $10 billion Prelude floating LNG project off Western Australia's northern coast. "
  • #1,052
  • May 20, 2011 3:06am May 20, 2011 3:06am
Watch this TL if looking for a short opportunity (the PA is looking like a bear flag and the bigger picture daily is looking like a Head and Shoulders forming, right shoulder being put in now).

And watch EUR/AUD, these wicks will either cause the cross to jump north (AU go south) or the reverse, EUR/AUD will sell down hard to support price on AU holding or moving north.
Attached Images
  • #1,053
  • May 20, 2011 3:11am May 20, 2011 3:11am
Quoting jerrycollie
I have to side with Pipstrumpf on the bond issue. The Fed prints money out of thin air; and buys T bonds. This supports the high price of T bonds and thereby keeps the yield low; since price and yield are inversely proportional. QE2 will end on June 30, and the FED will quit printing money and buying T bonds. The best way to prepare for the end of QE2 is to prepare for QE3 (and QE4). Therefore, we should not short T bonds, unless we think the Republicans can hold the line on the debt ceiling and let the US default on its T bonds; which seems unlikely...
Ah yes, but the printing of money is potentially inflationary, which should be negative for bond yields. Remember the central bank cannot create money, they can only create reserves. It is the role of the commercial banks to create money, and a willing borrower. When you talk about money, you need to add credit into that equation as marked to market.

Also what do you mean about that the Greek central bank cannot buy bonds? Perhaps, but Who needs the small and irrelevant Greek central bank when you have Mr Trichet at the ECB. The ECB have been buying Greek bonds by the bucket load to try to suppress yields. Now the ECB are sitting with a huge loss on their balance sheet. The ECB and Mr Trichet bought at least 35 Billion Euros of Greek Bonds in 2010 alone. Dear knows how much more they have now, but if people are talking about a 40 billion Euro loss to the ECB then it is a lot. I suspect a fair amount. The ECB have backed themselves into a corner. Greek is going to default no matter what, and the ECB will take part of the loss, which probably explains Trichet walking out of meetings this month when Restructuring was talked about. As a percentage the ECB purchase of Greek Bonds is huge relative to the FED purchases of T-Bonds. Yet yields are falling on T-Bonds and rising on Greek Bonds, and rising on Portugal and ireland where the ECB have been buying like mad. It brought yields down for about a week.

Do not get me wrong, I m long term and even medium term bearish on the USD, but the signs are there that a big slowdown is coming before more QE, and it a repricing in asset prices mathematically will lead to a stronger USD, due to such a negative correlation, meaning that the reversal in USD liquidity as Mr leverage reverses will mean a higher USD, might only last 3-6 months, but the moves can be brutal and not to underestimated.
  • #1,054
  • May 20, 2011 10:31am May 20, 2011 10:31am
Hi,

Anyone Trading this Gartley.

Any advice or comments will be highly appreciated.

Thanks.
KC.
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  • #1,055
  • May 20, 2011 10:47am May 20, 2011 10:47am
Target1 hit at 1,0662.

Looking for Target2 at 1.0677 and Target-3 at 1.0694.

  • #1,056
  • May 20, 2011 11:44am May 20, 2011 11:44am
Quoting FX-Petra
Still waiting for price to break through 0700 to close my last 2 longs........

Would buy some more ahead of 0460.....

Regards,

1.0703 today -> Hope you have got out...

Regards,
Use me as a contrarian indicator
  • #1,057
  • May 20, 2011 11:49am May 20, 2011 11:49am
Quoting mrbandwidth
1.0703 today -> Hope you have got out...

Regards,
closed 1 @ 0700. Left the other open. Bought 1 lot again near the bottom of the 1hr trendline @ 0625. Just closed it @ 0680, and I went ahead and closed my 0702. I really hate closing negative tickets, but I have made a lot on this trade sequence..... flat and profitable going into the weekend tends to make my "down time" a lot more pleasent!!! Hope all you tickets are in the green!!

Regards,
  • #1,058
  • May 20, 2011 11:24pm May 20, 2011 11:24pm
And now for the weekend quiz - can you spot the difference with Friday's PA?

What do these charts tell us? What is the impact of this for AU?
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  • #1,059
  • May 21, 2011 4:56pm May 21, 2011 4:56pm
What these charts tell us is that even if the S&P runs south hard, market is not supporting either the Euro or the Dollar.

What market is doing is taking money out of both the Euro and the USD and shifting money into AU and the Kiwi.

In times past, when the S&P put in a strong bear day like Friday, both AU and the Kiwi would have been hammered as risk comes off the table. However this did not occur on Friday, instead both AU and the Kiwi were well supported although both volatile (notwithstanding the weekend coming up and market wanting to park it in AU and NZD for the swap).

What we are seeing here is potentially an important (but not unexpected) fundamental shift in normal market behaviour.

This bear flag on AU will play out one of two ways - it will either thump south and engulf (normal) or it will continue consolidating and then push north with equal force (the exception, but does happen with sufficient regularity to be worth noting).
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  • #1,060
  • May 21, 2011 5:40pm May 21, 2011 5:40pm
Quoting Jade Gate
In times past, when the S&P put in a strong bear day like Friday, both AU and the Kiwi would have been hammered as risk comes off the table. .
hi,

you don't correlate this with gold ?

best regards
TRUST THE PROCESS !
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