Bunds at all time Highs

Its been a very tough market to trade lately especially as a day trader, as volatility has dried up to some of the lowest levels on record, as well as the absence of any sellers which has pushed the Equity markets massively higher in the past 6 weeks. Despite weak data out of the EU, mixed data from the US and recession in Japan, it seems the only thing that is required to keep the markets going is cheap money and QE. The SPX is up 14% since October 16th, Nasdaq is up 14% and the Dax is up 20% of which 10% of the move has happened in the past week. 

The main explanation for this is the fact that most fund managers are underperforming relative to the benchmark, which has lead them to push this market up and snap up stocks in order to become vested and show performance. There is a lot of cash on the sidelines and this is all coming to work right now, despite very high valuations and a very stretched market. 

On the Bond front, Bunds have hit new all time highs today at 152.85, as QE talk from the ECB and lower inflation figures has pushed Yields down. Looking at the chart below we see the uptrend that has developed of late, with the next target in the Bund being 153.40,  with near term support at 152.47, then 151.54. 

With rollover approaching, we could see some volatility in the roll, but the trend is likely to remain intact.

Big miss on German PMI

A big miss on German PMI today with the Flash Manufacturing coming in at 50 (exp 51.5) and Services coming in at 52.1 (exp 54.5). Since Germany is carrying Europe pretty much this number will come as some concern to Euro Leaders and the ECB increasing the likelihood of all out QE in the Eurozone, and that lovely word QE is just what the stock market loves, and most likely will propel Dax and Cac to further higher moves.
This is the environment that the central bankers have created, but when things turn it will turn hard!
In terms of reaction today, we had the expected push up in the Bund, with a 30 point move in the space of 5 minutes with resistance at 151.52 which was Mondays lows.  A break up above this level will bring about 151.77 as the next target, and then 152.10, the week highs the next target after that.

Across the channel, the UK benefited from better retail sales, with the divergent growth between Eurozone, Japan, UK and US becoming ever wider. Because of this its unlikely that the US or UK will have the balls to pull the trigger on rates leaving this easy bias around for longer.
ES is down 7 dollars as I write, and Dax down 40, BTFD?

Equities got a right beating!

Its been a wild few days in the Equity markets worldwide. From a position where we barely have had any 1% moves this whole year, to having them on a regular occurrence. This move was inevitable as the markets were too overstretched, but while central Banks continue to maintain super accommodative policy the risk for a melt down style move remain, as there is only so much yield chasing that can be done.
Either way it will be interesting around these levels, as I think there is still more downside to go but it will be very volatile, which will give some good opportunities for day traders, which is a good thing, since its been a crap day traders market this year.
My one real annoyance, is that I have had some kind of short in Index position for the best part of 7 or 8 months via options, and apart from being long VIX, I pretty much haven't benefited from the move down which is very frustrating, as its sods law that the move happens when you don't have your position on. But thats trading for you, the silver lining was the fact that I was long Corn and took nice profits on it although I got out way too early, and left a lot on the table.
Going forward I'm getting long Short Sterling Spreads on the this flattening that has occurred, and will keep adding to my position if it continues to go down, and generally try to get stuck into some of the volatility in these Indices.

Intro to Trading Butterfly Futures

A brief Video into trading Butterflies.

NFP beat helps rally Equities

So it is back to business as usual as the Equities rallied strongly friday afternoon after a bit of a mixed week. Euro Indices came of quite strong with the Dax pushing 9200, FTSE 100 testing 6400 and the EuroStoxx testing 3100. The US indices have come off relatively less, but now are in mid range territory from high to recent low. I feel like there is a bit more resistance then usual as the markets are likely to consolidate, however the plunge in the VIX on friday might suggest a bit more upside to come.
Euro Indices are likely to remain under more pressure as data coming out has not been good and this mornings German Factory orders was a big miss. This coupled with the fact that the ECB is staying put with its current program suggests there is limited upside for now.
Not much to report on the Bond front, I'm using pullbacks in Short Sterling Spreads to go long, and the same with Eurodollar and Euribor Spreads.
I still remain long corn, hoping for a bit more of a move to get out, ideally above 3300.

Bonds Selling off as Dollar Strengthens

As Equities remain elevated, Bonds have taken the cue to sell off, as expectations of rate movements from the FED and BoE weigh.
Euro Bonds upside has been capped as it seems as though the ECB has used most of its bullets, with rate cuts and the announcement of QE in last Thursdays rate meeting.
I have generally tried to go long as much as I can in the Euribor Spreads as the floor for now has been set, and I went long into the initial fall in Spreads during the press conference to then realize profit as the floor seemed to be reached and the curve started to steepen slightly.
The following day we had weaker NFP as well, with the instant reaction in Equities going up, and Bonds going up also. This reaction proves the fact that the market doesn't care about fundamentals, its trading on the basis of cheaper money for longer, and this is the main driving force behind the one way move that we observe day after day.
Despite this worse number, the dollar has reached multi month highs, as expectations for FED tightening takes hold.
The market has been tough to trade as the trends have been strong, and despite, oversold conditions in some USD fx pairs, there doesn't seem to be any stabilization as of now.However I'm using options to play direction so as to not be whipsawed out but the frequent spikes that have been occurring.
Currently I'm long Corn, with a put bought as protection, and I'm short ES via a Call Spread financed by a out of the money put. A slight correction would be nice!
Looking forward we have US Retail Sales due, which could provide a bit of volatility,

30 Yr Strategy Update

Its been a quiet period since the end of August with two trades being triggered, one for a loss and one for a profit. Overall profit has been 2 ticks.

Spreads Fall as Bunds break 141

We have seen a sell off to the low of the ranges amongst the Euribor curve as the Bund first broke 141, and now is close to testing 142, as poor PMI numbers out of Europe as well as a poor ADP report out of the US lead to more safe haven buying. The Dow is trading at 4 year highs as is the Bund, which is being fuelled by cheap money. This in theory can continue until monetary stance changes, but it seems as though there is more likely to be further easing rather then tightening out of the US, which could fuel this rally more. After being off the past week, I have entered today long 3.5s/4s in Mar13 Jun13, Im looking to go long 4.5 in Jun13Sep13 too as this has been a solid level in this spread over the past few months. We have alot to look forward to this week, with the ECB rate meeting tomorrow as well as NFP on friday. Hopefully this will dish out some good volatility. Bunds now look well and truly bid, and it has broken the trend of retracing 100 ticks on the last move up in the mid 140s, which was inevitable eventually. With yields now at 1.6% we are reaching Japan yield levels, and so any good news I think can trigger 100 point sell of at least in this Bund, although i think we will stay above 140 in the near term.

Greeks pass austerity measures - Bund trades lower

On Thursday we had a dip of almost 100 ticks to sub 137 in the Bund as seemed the Greeks passed there austerity measures, on friday we rallied up back above 138, and as high of 138.70 as it was now apparent that they will not agree to pass these measures as there was mass protests by the Greek people. Finally over the weekend the vote was passed and we drop 100 ticks again in the Bund and now trading 137.78.
Now where we go next is anyones guess in this casino we call the market. Its hard to form a medium term view as we are held hostage by the Greek indecision. Technicals go out the water some what as another rejection could push this higher again. We seem to have found an area of value in the 137.70-80 region as this has been an area of significant trade over the past week.
Like many I dont think this is by any way finished and we will continue to have volatility in the bund on the back of continuing comments coming out the Greeks, the EU and IMF and I suspect that we will once again trade back into the 138s, even 139s in the Bund again at some point soon.

Bund, Ftse and Euro analysis

After an inline non farm report we still remain solidly up for the week after the huge gain on Wednesday. Check out the video on the weeks action and where we could go next.

Central Banks Intervene

Fears of a deepening of Europe's debt crisis have prompted the world's leading central banks to pump US dollars into the financial system, in a co-ordinated action designed to boost market confidence.

The Bank of England joined the US Federal Reserve, the European Central Bank, the Swiss National Bank and the Bank of Japan on Thursday to announce that they would flood money markets with dollars over the coming months.

The move, on the third anniversary of the collapse of the US investment bank Lehman Brothers, sent shares soaring in banks heavily exposed to debt default by Greece and the other struggling members of the 17-nation eurozone.

Under the terms of the deal, banks will be able to bid for unlimited amounts of US dollars at fixed interest rates in three separate auctions. The first of these will be on 12 October.

Watch Below to see Market Reaction from the move

Post ECB reaction - Bund, Ftse

We had another move up in the Bund yesterday with yields getting even lower to mad levels, which suggests, its all about taking risk of the table.
Below is a review of the action over the past few weeks.

Non Farm Payrolls disappoint

No jobs created in August in the US that was the grim picture today that was setting the markets back as the Dow is off some 200 points. Below are some of the key points:
Key Highlights:

At 0, the NFP number is a plunge of 85K, from a downward revised July, which was previously at 117. This is the biggest drop since September 2010
The Household Survey saw an increase of 331K in the number of employed
Average hourly earnings for all employees on private nonfarm payrolls decreased by 3 cents, or 0.1 percent, to $23.09. This decline followed an 11-cent gain in July. This is the first time the avg hourly earnings have been negative MoM since January 2008
Underemployment, U-6, rose to 16.2%, from 16.1% in July
The labor force rose to 153.6 million in August.
Ironically the only good news in the report, was what many have been indicating is a negative for months: namely that the Labor Force Participation rate actually rose for the first time in months from the nearly 30 year low of 63.9% to 64.0%

Below is a video of the market moves made in the Bund, Ftse and S&P

Futures Analysis: Bund, Schatz and Dax Spike

Another very volatile day which combined with low liquidity has mad for some very big moves. Bund has reach all time highs and we had a 120 point spike down in the Dax on 611 lots! Watch below as I analyse the latest moves.

Mad Market Volatility - Dax, Bund, Schatz, Ftse

Just put this video together around 30 minutes ago and since then we have come off massively again in stocks. We bounced off the near term support in the Dax at 5721 but after bouncing 50 ticks we dropped another 100, such is the volatility lately.
The video looks at some of the wide ranges we have had lately.