30y T Bonds + 3 points at 6.06 :) :) :) - 500 Beiträge pro Seite

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wow short squeeze :O

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It`s crazy," said Charles Farra, bond trader at Goldenberg Hehmeyer in Chicago. "There`s a massive short-covering in the Treasury market, especially in the long bond. The basis has blown up by 2 points in the last 24 hours."

Today`s short-covering is an extension of a rally that`s been going on for the past few weeks, sparked by concerns over dwindling supply. Everyone has known that the Treasury Department was planning to sell fewer 30-year bonds in the future, and the release yesterday of the details of those plans has sent the long bond flying anew.

"I don`t think it`s going to stop," Farra said. "I don`t want to do anything. This is worse than trading pork bellies."

The stock market could well use an extended bond rally. Yesterday`s Federal Open Market Committee meeting didn`t change much for the stock market, which will have to continue to fight for its points in the same environment of incremental rate hikes that it`s been operating in since last June. Few would hazard that 25 basis points will be sufficient to slow an economy growing at a pace well above what the Fed believes to be its maximum noninflationary speed. Most economists expect another rate increase next month, and more than half of the 30 primary dealers of government securities polled by Reuters see a fed funds rate 50 basis points higher than it is now by year-end.

But, lest anyone forget, the upshot of strong growth is strong earnings, and this reporting season is turning out to be one of the best the market`s seen in a while. Of the 70% of S&P 500 companies that have already reported, 64% have exceeded expectations, according to I/B/E/S International. And even if one takes the cynical view of corporate guidance as an exercise in lowballing analysts, it`s hard to deny that bottom lines look good. Fourth-quarter growth has come in at an impressive 21%.

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Rumors of Distress Sweep Treasuries Higher
By Elizabeth Roy




The fire in the Treasury market, which started in the 30-year sector, spread to the entire market as a result of rumors that the massive repricing of the Treasury market in the last few weeks has some players in deep enough trouble to get the New York Fed involved. The New York Fed has since denied the rumors.

During the first half of the session, demand for the 30-year Treasury bond spiraled out of control, driving its price up as much as 3 2/32 at one point.

It was an extension of the trend of the last few weeks, in which the Treasury Department`s plans to shrink the supply of 30-year bonds has driven their prices up relative to the shorter-maturity Treasury benchmarks. As a result, the yield curve has inverted: Long-maturity yields have dropped below short-maturity yields.

But in the hour before noon, demand for Treasuries of all maturities surged. The 30-year bond was lately up 2 at 99 27/32, slashing its yield 15 basis points to 6.136%, the lowest since mid-November. The 10-year note rose as much as 1 21/32 and was lately up 27/32, cutting its yield 12.2 basis points to 6.453%. The five-year note rose as much as 1 2/32 and was lately up 17/32, shaving its yield 13.4 basis points to 6.528. And the two-year note rose as much as 12/32 and was lately up 2/32, dropping its yield 3.4 basis points to 6.562%.

Earlier, the 10-year note was down as much as 31/32. The five-year note was down as much as 6/32, and the two-year note was down as much as 4/32.

At the Chicago Board of Trade, the March Treasury futures contract was up 1 at 94 15/32.

The fever to own the 30-year issue morphed into a equal-opportunity rally when rumors started to spread that the big changes that have taken place over the last three weeks in the shape of the Treasury yield curve have resulted in trading losses of such magnitude that one or more large financial institutions is on the brink of collapse.

The New York Fed, which brokered the rescue of the Long Term Capital Management hedge fund in the fall of 1998, subsequently said the rumor that it had called an emergency meeting with bond dealers was "completely unfounded."

Huge changes in the yield relationships between Treasuries of different maturities matter because those yield relationships are commodities unto themselves. For example, a trader who expects the difference in yield between the two-year Treasury note and the 30-year Treasury bond to increase can buy the two-year note and short the 30-year bond. As long as the difference in yield increases, the trade will be profitable, even if the prices of both securities drop.

The changes in yield relationships over the last few weeks have been extraordinary. In just one example (there are dozens, when you count the futures and other derivatives markets related to the Treasury market), the difference in yield between the 30-year bond and the two-year note went from 24.8 basis points on Jan. 22, to negative 42.6 at last glance. Earlier today, the spread was negative 55.4.

For every trader who made a killing on the move, there`s one in critical condition. "A lot of people are happy, and a lot of people are unhappy," said one market analyst.

The rage to own the 30-year bond grew from seeds planted in August, when the Treasury cut the number of 30-year bond auctions from three a year to two. It accelerated last month, when the Treasury announced the details of a plan to buy long-dated securities back from investors -- another measure to reconcile the federal budget surplus with the government`s borrowing program. And it went into overdrive yesterday, when the Treasury said it will "significantly" reduce the size of one of the two annual long bond auctions.

Describing this morning`s action, Warburg Dillon Read Treasury market strategist Mark Mahoney said: "It`s just a very, very big panic right now." Investor demand for the newest 30-year Treasury bond, the one issued last August, with a 6.125% coupon and maturing in August 2029, was "an extraordinarily huge panic, comparable to the six-and-a-quarter of August `23 squeeze of 1993 and the nine-and-a-quarter of Feb. `16 squeeze of 1986," Mahoney said, referring to previous instances of investor frenzy to own particular bond issues. "People are selling off-the-runs to buy the bond, selling corporates to buy the bond, selling mortgages to buy the bond, overseas guys are buying the bond. We`ve got a pretty massive panic going on right now."

The 1993 panic, like the current one, was triggered by cutbacks in the Treasury`s auction schedule, Wrightson Associates chief economist Lou Crandall said. In May 1993, the Treasury reduced the number of 30-year bond auctions from four a year to three, and discontinued seven-year note issuance. The 1986 panic, Crandall said, happened when Japanese investors who owned a large chunk of the 30-year bond Mahoney named did not sell it and buy the next 30-year issue, the 7.25% coupon maturing in May 2016, as expected. That left dealers unable to cover their short positions in the February 2016 bond, Crandall said.

Before the flight-to-quality started, shorter-maturity note yields were significantly higher. That reflects the fact that the Fed, which yesterday hiked the fed funds rate to 5.75% to 5.5%, is poised to hike it further in the coming months to curb the economy, which might otherwise overheat. Short-maturity yields are heavily influenced by the fed funds rate.

Meanwhile, swap spreads, an indicator of willingness to own any kind of spread product -- corporate bonds, mortgage-backed securities, etc. -- are moving inexorably up, indicating increasing distaste for spread product. The bellwether 10-year swap spread was lately 96.50 basis points, up from 70 a week ago and the highest since September, which was the worst period for spread markets since the panic of October 1998.



Nice squeeze, ist bullisch fuer Aktien

14:45 NY Zeit Nasadaq + 117 !!

[buckweiser]

...jetzt müssen die Aktien eigentlich steigen und das tun sie ja auch

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