The Bond Bulletin by Carley Garner
The Bond Bulletin
by Carley Garner
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2008-08-22
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August 22nd, 2008
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Treasuries slid but momentum was lacking.
There is a lot of talk of many traders taking off until after Labor Day and judging by the feel of the markets, they are more than just rumors. There wasn't much news released this morning, but the market did get to chew on a speech provided by Fed Chair Ben Bernanke.
The interest rate complex remains resilient in spite of stronger equities. Light volume aside, this suggests that the bias remains up regardless of the fact that yields are seemingly too low. I like the idea of a temporary correction in the long bond to about 116'15 but from there question whether the bears will have the edge. Likewise, the 10 year note should find support near 116, and a long-term slide below this level doesn't seem to be in the cards.
An afternoon sell-off in crude oil helped prop bonds and notes up as lower energy prices removed a shred of inflation worries. Also shedding light on the bull camp, another impressive rally in the U.S. greenback may aid in the confidence of foreign investment dollars.
Seasonal tendencies in the interest rate complex tend to be somewhat accurate, those tempted to sell bonds based on fundamental research should be sure to hedge their bets through the use of an options or futures spread. Perhaps a synthetic position may be the way to go. For example, those looking to sell the 10 year note as suggested below but not willing to exercise the patience necessary to get filled at the stated price or aren't willing to take a chance of "missing" the trade could sell a futures contract and simultaneously purchase a call option or a call option spread. Contact me for ideas.
Sorry so brief, it was a painfully quiet Friday in the markets.
Option Recommendations
**There is unlimited risk in naked option selling.
August 12 - If I am right, you may be able to sell the October 121 calls for 20 or better. Be patient and let the market come to you...if it doesn't it wasn't meant to be.
August 15 - This order would have been filled today. I am looking for an opportunity to buy this back quickly, contact me for details.
Futures Recommendations
**There is unlimited risk in trading futures.
August 18 - Sell 1 Sept. T-Note @ 117'17 GTC, contact me for guidance or if you have questions.
Carley Garner
Senior
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| Meet the Author |
Carley Garner
Senior Analyst and Broker; Stocks and Commodities Magazine columnist; Author of “Commodity Options” to be published in early-2009 by FT Press a division of Prentice Hall.
The Bond Bulletin has contributed 153 issues.
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