Thursday, 31 May 2012

Did I say 145, its 146 now for this Bund

This market is getting crazier by the day, it was just yesterday the Bund hit 145, representing a yield of below 1.3% for 10 year money, scratch that lets make it below 1.25% as the Bund broke 146! Admittedly I went short yesterday thinking this was good value here, but got stopped out, and now with June Bund expiring soon, its best to now look at sept Bund. Thinking where we are with stocks, and considering where we have been in the past few years, its not inconceivable to think that if we break 12000 in the Dow and start heading towards that 10000 level, we may even approach 150 in the Bund. The name is capital preservation, and this is the main driver at the moment. Regardless of whether the trade actually makes sense. Along with the Bund rise, we see continued dollar strength, with the Euro hitting 1.2340 and Sterling pushing below 1.54. While uncertainty still exists, I don't see no reason why the current trends wont continue, although the likelihood of some type of global intervention is more likely as this often happens during dire times, so watch out for the reversal!

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