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Wednesday, February 20, 2013

QE-n. The Put-up Job

 The Good Guy is wondering:
"pain (price decrease) incurred on 30 year bonds through selling does not match (percent-wise) the euphoria in stocks"
    My thoughts exactly. But its a fallacy of stock trader wading in Bond Market, and trying to game it with the same tricks. Government bonds is much bigger market than stocks, takes some time to get going.

    I tried to borrow 10k at 3% for 30 years from everybody I know. They just laugh at me. But millions of people give it to treasuries without any second thoughts. Hmm.  Whats important is a fact that there is no active investor alive, who have seen a bear market in US Treasuries. But that is not THE biggest problem. Why?  Because the hard right edge of Long Bond chart is not active investors, but pensions, IRA's, mom-and-pop etc., who have no clue what shit they got themselves into.

      Back here in QE-land:
I don't know what Bearded Clam is buying, but visibly its not Government Bonds.
O, I remember - its Mortgage Backed Bonds (see MBB chart below). What? Also at 6 months low? How can it be - 85bil per month freshly printed Dollars...   Printed Dollars?    /DX must be in a crapper by now. No? Wrong again, you know where dollar stands, and I know your bet on where it goes. (this was directed at Molecool, who was long Dollar at the time of this writing)

     Guys, am I the only one who see complete lack of logic/correlation here.
Call me crazy conspiracy theorist or just a smelly yellow fruit, but I think this QE-n is a total put-up job.

      Fine, I have a theory. Feds are not stupid to buy bonds here - let the price fall and pick it up on a low print. Nah, too cute
Or - Big boys are selling bonds faster than Fed buying. Sell? But to whom?
Or - Bermonkey relaxing on a way to golf club, transfers money from left pocket to right one, books it as a profit, collects a fee...

I really don't know, but my bullshit-o-meter has been stuck on red for months, ever since this post (link)

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