Just bought 2% ZSL at 15.11.
SPX 1219.80 is my stop for stock positions. DX futures 75.81 my stop on the long, but this will be moving up with the 265-minute M/A.
The Fed is buying treasuries, not stocks or stock index futures. As long as private investors were willing to go along with them then they had the best of both worlds, monetization and profits. Now private investors are selling more than the Fed is buying and the result, long rates are going up and the Fed is starting to lose money on their purchases. There is an ocean of treasuries in the world and their holders are getting afraid.
Arthur Burns and William Miller attempted to force the economy higher in the late 70's and the bond market took them to the woodshed. How can we explain the bond market going down with the amount of Fed buying?
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Don't understand your comment regarding bonds. The bond market is ripping to the upside today after making a low yesterday afternoon.
ReplyDeleteThat would imply more buyers than sellers in bonds, no?
It is difficult to determine how much of the QE money actually makes it into stocks and commodities, I agree. But if the Fed is buying bonds, there's someone on the other side of that trade who is selling them, and what are they going to do with the money they got from that sale? Seems likely it will go into stocks and commodities, no?
Silver
ReplyDeletehttp://99ercharts.blogspot.com/2010/11/silver.html
ES and ZB
ReplyDeletehttp://99ercharts.blogspot.com/2010/11/es-zb_4293.html
Really, it is questionable how much fed purchases affect bond prices. In a rippin' deflationary environment, treasury yields are going to go negative, precisely as Prechter has claimed.
ReplyDeleteThe Fed's theory is that their purchases will keep rates low and ipso facto stimulate economic activity. The ipso is no facto and now long rates are moving upward spurred on by their actions. Once their purchases cease then we could see bond markets move to lower yields, but for now their POMO is having a perverse reaction as bond holders unload.
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