Murmurs From the 10-Year Note

287
Sat, Aug 18, 2012 - 12:43pm

What happened? Just a few weeks ago, we were worried that the treasury market was becoming a "black hole" that would soon suck in all financial assets. Instead, rates have reversed significantly. What does this mean and what does it portend?

First of all, here's where we were back in late July. The 10-year note had just fallen through 1.40% and it had everyone's attention: https://www.tfmetalsreport.com/blog/4046/two-things-my-mind. Here we are, 3-4 weeks later, and were at 1.82%. That is a HUGE move! What the heck happened? I think I have an answer but, first, some background.

Take a look at these two charts. One a is daily 10-year and one is a weekly. Note that the current price of the 10-year is 132.50. This is important because the area around 132 appears to be very important support. You can plainly see horizontal support on the daily chart but, looking at the weekly chart, 132 is also near the trendline from the lows of late spring 2011. Breaking that support and that trend would set a top and would foreshadow a move to 127-128. Now, look at the weekly chart. Notice that 10-year prices have been in a very long term up channel. Then notice that the past three Fed "programs" have been initiated when prices were near the top of the channel.

So, what is going on? Why the sudden dropoff in price? I think I have the answer. I posted this presentation yesterday. You may have already watched it. Watch it again and stop it right at the end, near the 57 second mark.

Fed vs. Private Sector Treasury Holdings

OK, just a couple more things and then I'm taking the rest of the weekend off. First, yesterday's CoT was very interesting, particularly in silver. Before jumping to conclusions, I'm going to wait to see what Uncle Ted thinks of the disaggregated report. In the meantime, here's a C&P of my comments from yesterday afternoon:

Submitted by Turd Ferguson on August 17, 2012 - 2:59pm.
MODERATOR
I had expected gold to be a non-event and it was. For the reporting week, price fell $10 and OI only fell by 67 contracts. The only item of minor note was the 2,478 net drop in The Gold Cartel net short position which brings their net short ratio back under 2 at 1.98:1. Again, this is historically low and very bullish.
The action and the intrigue is in silver. For the reporting week, silver fell 32c but total OI rose by 4700. Obviously, there was a lot of new buying and selling going on. The question was/is: Just whom was on each side? Well...whaddayaknow...it looks like we have a civil war starting in silver.
For the week, The Silver Cartel total long position grew by 3,202 contracts. This is likely the silver "raptors", as Uncle Ted likes to call them. However, The Silver Cartel total short position also grew by 4,752 contracts. This is likely JPM but I'll wait to see who Ted fingers in his report tomorrow.
I've never seen a Silver Cartel long position this high before. Never. Maybe it has been but I sure as heck don't remember when. For perspective, on 2/28/12 it was 33,802 and on 4/20/11 it was 34,043. Nearly identical levels before sharp beatdowns. On 12/27/11, just before a 2-month, 20% UP move, the total long position was 41,224. Now it's 47, 797!
Similarly, the total short position is unusually large. The last time it was this high was on 3/6/12, just after the peak and subsequent beatdown of late February. In the recent past, it has been as high as 89,827 on 4/6/11 and as low as 55,356 back on 12/27/11.
At first glance, we appear to have the makings of a civil war. Instead of acting collusively, the smaller banks seem to be buying and thus attacking the short position of JPM. To contain price, JPM is being forced to issue new paper independently. Again, this is how it appears. Let's wait until Uncle Ted dissects the report before jumping to any more conclusions.
Perhaps the smaller sharks smell blood in the water. Maybe they sense the opportunity to trap JPM on the short side and squeeze the daylights out of them. Could these banks be expecting an historic, hot and explosive move in the weeks ahead???

And then there's this. While researching this post, I came across this video from March 19th. I don't know who this Ilcyzsyzn guy is but, right now, he looks like Nostra-freaking-damus! Hopefully, he's made himself enough money over the past six months that he can buy himself a couple of vowels.

https://finance.yahoo.com/blogs/breakout/wait-gold-bottom-1525-ilczyszyn-202824187.html

I hope everyone has a great weekend. Relax and prepare mentally for everything that is soon to come.

TF

About the Author

Founder
turd [at] tfmetalsreport [dot] com ()

  287 Comments

  Refresh
Kris
Jul 25, 2013 - 1:40am

Reply

I think we're setting up for a nice September, which would be in line with the typical yearly gold cycle. A dull summer, with everyone ramping up in the autumn for their weddings and Esky.

Meanwhile BTC gave up some handles - from the $14 handle it's back down to the $12 handle. But like with gold, I think anything that's not-dollars will do well. Doesn't really matter what it is, as long as it's tradable and will hold its value.

SaratogaPrepper
Aug 20, 2012 - 2:09pm

^ ^ ^ ^ ^ ^

ROFLMFAO!

ClinkinKYKarankawa
Aug 20, 2012 - 1:44pm

@ Karankawa

I've been very active in the political system for 5 years. If you haven't been, you have no credance about candidates in my book, but I support your right to post your views.

--------------------------------------------------------------------------

That's very gracious of you:)

Dagney Taggart
Aug 20, 2012 - 12:37pm

@DT 6 and 9

If DPH hasn't already replied with this...

https://www.youtube.com/watch?v=VNXWMHu9An0

Sorry, could not resist.

Short Stack
Aug 20, 2012 - 12:20pm

...and there it goes.

Right back down again. Damn you JP !

Well, trying desperately to hold above 1620 and 28.00. Keep your fingers crossed folks.

BUDDHA PRINCESS
Aug 20, 2012 - 12:14pm

James Turk

James Turk on metals' prospects, government intervention, and need for diversification

Interviewed by GoldMoney's followers on Facebook and LinkedIn, GoldMoney founder and GATA consultant James Turk covers his outlook for the monetary metals markets, manipulation of those markets, and government intervention against gold and silver investors. He advises investors to diversify their gold and silver holdings in form and location. He also cites GATA's work.

Posted at GoldMoney's site

The link is here.

Short Stack
Aug 20, 2012 - 12:13pm

Visit the FAQ page to learn how to track your last read comment, add images, embed videos, tweets, and animated gifs, and more.

BUDDHA PRINCESS
Aug 20, 2012 - 12:09pm

S&P 500 Stalls

S&P 500 Stalls Near Key 2012 Turning Points, US Dollar Probing Higher

S&P 500 – Prices are resting resistance in the 1415.10-24.90 area marked by the March and May swing tops. A push higher beyond that targets 1440.20, the May 20 2008 high. Initial support remains at 1392.10, with a break below that exposing a minor downside barrier at 1376.10 and a more significant one at 1363.90.

Daily Chart - Created Using FXCM Marketscope 2.0

Commodities Tread Water as Risk Trends Look for Direction

Commodity prices are treading water as financial markets look for direction amid a lull in top-tier scheduled event risk. S&P 500 stock index futures are pointing cautiously higher, hinting the growth-linked crude oil and copper price may have scope to advance. A risk-on scenario may likewise offer a boost to gold and silver as ebbing haven demand weighs on the US Dollar. July’s Chicago National Activity Index is the only item on the US data docket.

WTI Crude Oil (NY Close): $96.01 // +0.41 // +0.43%

Prices broke resistance at 95.41, the February 2 low, opening the door for a challenge of the 61.8% Fibonacci retracement at 97.82. A break above that exposes the psychologically significant $100/barrel figure. The 95.41 level has been recast as support, with a drop back below that targeting the 50% Fib at 93.90.

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD – Prices continue to drift below resistance in the 1620.45-35.70 congestion area. Near-term support remains at a rising trend line support set from late June, now at 1599.67. A break below this boundary exposes a longer-term trend line established from the May 16 bottom, currently at 1578.22. Alternatively, a push above resistance initially targets the major trend set from the April 23 2011 peak, now at 1666.52.

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $28.09 // -0.13 // -0.46%

Prices continue to stall above support at 27.68. A break downward initially exposes a rising trend line set from the June 28 low, now at 27.37. Near-term resistance remains at 28.44, with a breach above that opening the door for an advance to challenge 29.42.

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.420 // +0.038 // +1.12%

Prices are pulling back from resistance at a falling trend line set from the April 3 high, a barrier reinforced by a horizontal level at 3.435. Near-term support lines up at 3.387, with a break lower exposing the 3.300-32 area. Alternatively, a break above 3.435 targets 3.535.

Daily Chart - Created Using FXCM Marketscope 2.0

US DOLLAR – Prices are testing resistance at 10073, the confluence of a falling trend line set from the July 12 high and the midline of a falling channel carved out over the past three months. A break higher exposes the 10139-69 area. Support is at 10041, with a break below targeting long-term rising trend line support at 10010.

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

Dagney Taggart
Aug 20, 2012 - 10:56am

Jesus, Roark.

Tell that fool a 9 will never be a 6. The coin isn't 6666 purity. And 6666 isn't 666.

All I can think of right now is that motivational poster that says: Astrology: Because 500 million people are going to do the same exact thing today as you are.

Subscribe or login to read all comments.

Contribute

Donate Shop

Get Your Subscriber Benefits

Private iTunes feed for all TF Metals Report podcasts, and access to Vault member forum discussions!

Key Economic Events Week of 5/18

5/18 2:00 ET Goon Bostic speech
5/19 8:30 ET Housing starts
5/19 10:00 ET CGP and Mnuchin US Senate
5/20 10:00 ET Goon Bullard speech
5/20 2:00 ET April FOMC minutes
5/21 8:30 ET Philly Fed
5/21 9:45 ET Markit flash PMIs for May
5/21 10:00 ET Goon Williams speech
5/21 1:00 ET Goon Chlamydia speech
5/21 2:30 ET Chief Goon Powell speech

Key Economic Events Week of 5/11

5/11 12:00 ET Goon Bostic speech
5/11 12:30 ET Goon Evans speech
5/12 8:30 ET CPI
5/12 9:00 ET Goon Kashnkari speech
5/12 10:00 ET Goon Quarles speech
5/12 10:00 ET Goon Harker speech
5/12 5:00 ET Goon Mester speech
5/13 8:30 ET PPI
5/13 9:00 ET Chief Goon Powell speech
5/14 8:30 ET Initial jobless claims and import prices
5/14 1:00 ET Another Goon Kashnkari speech
5/14 6:00 ET Goon Kaplan speech
5/15 8:30 ET Retail Sales and Empire State index
5/15 9:15 ET Cap Ute and Ind Prod
5/15 10:00 ET Business Inventories

Key Economic Events Week of 5/4

5/4 10:00 ET Factory Orders
5/5 8:30 ET US Trade Deficit
5/5 9:45 ET Markit Service PMI
5/5 10:00 ET ISM Sevrice PMI
5/6 8:15 ET ADP jobs report
5/7 8:30 ET Productivity
5/8 8:30 ET BLSBS
5/8 10:00 ET Wholesale Inventories

Key Economic Events Week of 4/27

4/28 8:30 ET Advance trade in goods
4/28 9:00 ET Case-Shiller home prices
4/29 8:30 ET Q1 GDP first guess
4/29 2:00 ET FOMC Fedlines
4/29 2:30 ET CGP presser
4/30 8:30 ET Pers Inc and Cons Spend
4/30 9:45 ET Chicago PMI
5/1 9:45 ET Markit Manu PMI
5/1 10:00 ET ISM Manu PMI

Key Economic Events Week of 4/20

4/20 8:30 ET Chicago Fed
4/21 10:00 ET Existing home sales
4/23 8:30 ET Weekly jobless claims
4/23 9:45 ET Markit flash PMIs
4/24 8:30 ET Durable Goods

Key Economic Events Week of 4/6

4/8 2:00 ET March FOMC minutes
4/9 8:30 ET Producer Price Index
4/10 8:30 ET Consumer Price Index

Key Economic Events Week of 3/30

3/31 9:45 ET Chicago PMI
4/1 8:15 ET ADP Employment
4/1 9:45 ET Markit manu PMI
4/1 10:00 ET ISM manu PMI
4/2 10:00 ET Factory Orders
4/3 8:30 ET BLSBS
4/3 9:45 ET Market service PMI
4/3 10:00 ET ISM service PMI

Key Economic Events Week of 3/23

3/24 9:45 ET Markit flash PMIs
3/25 8:30 ET Durable Goods
3/26 8:30 ET Weekly jobless claims
3/27 8:30 ET Personal Inc and Spending

Key Economic Events Week of 3/9

(as if these actually matter)
3/11 8:30 ET CPI
3/12 8:30 ET weekly jobless claims
3/12 8:30 ET PPI
3/13 8:30 ET Import Price Index

Key Economic Events Week of 3/2

3/2 9:45 ET Markit Manu PMI
3/2 10:00 ET ISM Manu PMI
3/2 10:00 ET Construction Spending
3/4 8:15 ET ADP employment
3/4 9:45 ET Markit Service PMI
3/4 10:00 ET ISM Services PMI
3/5 8:30 ET Productivity & Unit Labor Costs
3/5 10:00 ET Factory Orders
3/6 8:30 ET BLSBS
3/6 10:00 ET Wholesale Inventories

Recent Comments

by SteveW, 2 hours 45 min ago
by Blackwatersailor, 3 hours 8 min ago
by robobrewer, 3 hours 12 min ago
by robobrewer, 3 hours 18 min ago
by robobrewer, May 24, 2020 - 11:35pm
randomness