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

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turd [at] tfmetalsreport [dot] com ()

  287 Comments

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El Gordo
Aug 20, 2012 - 6:38am

LL

Why are you messing with soap and brushes and buckets? The successful development and implementation of any one of these great ideas of yours would surely make you an overnight multi-millionaire. Work smarter, not harder is what I always heard.

Lamenting Laverne
Aug 20, 2012 - 5:36am

Good Morning Turdville! - Glorious...

sunshine outside, and I need to clean my humble abode, but before I jump in the soap bucket, just a few thoughts:

@Larry: Well said. I have reached the conclusion that politics organized by parties is not working very well. Parties are a mechanism of molding, shaping and rasping off "wrong" edges, before a passionate individual will be even close to having real influence.

I have played around with an election system model based on individual candidates, as in private persons, who do not have to be affiliated with a party. The funding for campaigns is a problem, and I don't have an answer to that, but ensuring as a part of the election system, that all candidates are allocated main stream media time on an equal basis, and centrally funded for e.g. 3 pages of written material for distribution by mail in the candidates' constituency/home area, is a start.

Naive? Yes, but I would love to hear ideas on the subject. Purpose: Motivating honest individuals, who have sensible agendas, but who are not arch type power people, to even bother getting into the soup or hornets nest, if you like.

@ Hold Over: I tried to start a similar discussion here: https://www.tfmetalsreport.com/comment/364326#comment-364326

The vulnerability to cyber attacks is present and clear. Decentralized storage of data, which is less controllable, is a part of the answer, if you ask me. We can all participate. Imagine if all the many many readers of all the "Wake-up" movement websites take their individual research right this minute and dump in on a high quality external disk, and put that disk in a metal cookie jar wrapped in aluminum foil, I am willing to bet a quite significant part of important material, would be preserved and very difficult to get rid of for those, who wish to. Of course those researchers with the real goodies, would have to be - and probably are - more diligent than that.

Also - and idea for the web developers out there. I am sure that we have all tried following links, that have been taken down or altered since original post.

Wouldn't it be nice, if there was a piece of software, that copies not only the link to an article, video or similar, but also the entire webpage/video for backup locally on your computer local storage. No more screen dumping in chunks with no ability to search in you local files.

The copy function should enable recording of metadata like original link address, date, area, news outlet, author, timestamp etc. which would also enable analysis and dot connecting over time. As long as you do not republish, it should not be a copyright issue (but maybe it is - dunno). And if the need for republishing pops up due to foul play, well maybe then the copyright is not the first thing to worry about. Probably such a software already exists, but if not here is the idea for those with the ability to make it.

Anyway... just a few simpleton thoughts. Brushes and buckets are calling..... Have a nice day everyone ;-)

Torpedo Fish
Aug 20, 2012 - 5:18am

@RGINSAT, I hope you are right

I hope you are right. I still have some shorts to close and need to add more longs at the bottom : )

jb
Aug 20, 2012 - 3:30am

Silver

I got my silver out tonight to fondle since I haven't done that for a while and wanted to feel real money again. The stash seemed a little low and then I realized that I left a pile in the wall of the old house before we moved. Damn. And I heard boating was dangerous.

BTW - Turd you are the best. This last post makes so much sense I feel stupid. Which I am compared to most of this community. Thanks.

ratioarbitrage
Aug 20, 2012 - 2:51am

PBOC symposium discusses "gold and silver"

https://www.pbc.gov.cn/publish/goutongjiaoliu/524/2012/20120803184832431519361/20120803184832431519361_.html

中国人民银行货币金银系统制度建设座谈会在呼和浩特市召开

People's Bank of China monetary system of gold and silver system construction symposium held in Hohhot

Looks tantalising, doesn't it? This initially looked to me like they are working on monetary gold and silver introduction! In fact that seems to be the phrase they use to refer to Yuan banknotes and coins (which is perhaps telling in itself; Chinese comments welcome on this)

Meanwhile the translators have now been at the previous Chinese report I mentioned and some parts are posted with commentary on the FT blog site.

https://blogs.ft.com/beyond-brics/2012/08/17/sunny-skies-a-glimpse-into-chinas-gold-ambitions/

Another article this morning mentions that a PBOC official who called for silver to be incorporated in China's forex reserves (as well as raising gold to 10000 tonnes); I found the above while searching for Chinese verification of SD's story. Link to Silver Doctors below.

https://www.silverdoctors.com/canary-in-the-coal-mine-for-silver-manipulation-pboc-adviser-recommends-china-add-silver-to-official-reserves/

RGINSAT
Aug 20, 2012 - 1:52am

Silver - Wave 2 bottom projected on September 3

As long as the high at $28.461 is not exceeded, my work shows we still have to complete

wave c of C of the ABC for Wave 2. If Wave C = Wave A, the bottom should be $26.385,

and my next turning point is September 3, which now appears will be the bottom.

Karankawa
Aug 20, 2012 - 1:49am

The Last Two Posts Have Been Brought To You By The....

ClinkinKY

Do you really belive there is a difference between Obama and Romney? Do you think the last choice you had between Obama and McCrazy was real? Do you think any candidate that stand for the values you profess has a chance?

If not, why enter the fray of the deceived?

The only answer is congnitive disonance. You decide for yourself, don't see this as anything but information to someone I respect.

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.

Karankawa

ClinkinKY
Aug 20, 2012 - 1:35am

The Last Two Posts Have Been Brought To You By The....

...ABO (Anybody But Obama) Coalition.

It seems that even his biggest/loudest cheerleaders are "seeing the light" now.

Seriously, Mittens may not be "the answer", but I'll take my chances at this point.

Bugzy
Aug 20, 2012 - 1:29am

The Wizard of ounces

This has only just occurred to me:

The yellow brick road and the original was Silver slippers. (not ruby).

Gold is measured in ounces - Hence the wizard of OZ (ounces) behind the curtain........

Just one of those daft random thoughts (on topic too ;-))

Bugzy

ClinkinKY
Aug 20, 2012 - 1:26am

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