bond market going haywire

[Paulie]

Last I knew, the Fed WAS buying longer term treasuries. I also know that when the yield curve is this steep, it has always historically meant that recovery is on the way.

The argument can be made that THIS time around things are different, but then again the opposite could also be argued. It's not like this is the first time we've been buried in debt. Inflation makes it seem much higher compared to previous situations. This doesn't mean I condone it, though. The opposite, in fact. I DESPISE it.

Maybe it's because the Fed is pretty much painted into a corner..The Chicoms are getting squeamish about taking any more T-bills, and the Fed has to keep pumping the cash out to keep their scam intact for as long as possible.

In the meantime, investors are going schitzo trying to find some safe haven for what's left of their money, trying to at least break even for the inflationary flood they know is coming.

That about cover it?

It's called gold. Always worked, always will.

 

[Oddball]

It's called gold. Always worked, always will.

I understand that....Have a tidy sum of my savings tied up in $20.00 Saints and Morgans.

But for the paper chasers, it's really all they know and/or are comfortable with.

 

[Annie]

I'm just watching, not playing. However came across this piece this morning:

New Worry for Stocks: Treasury Selloff Pushing Up Interest Rates - Market Insider with Patti Domm - CNBC.com

New Investor Worry: Treasury Selloff Spiking Interest Rates
Published: Wednesday, 27 May 2009 | 6:15 PM ET Text Size
By: Patti Domm
Executive Editor
The stock market is watching the bond market, wary a spike in interest rates will derail a fragile economic recovery and snuff the market's rally.

Stocks tumbled Wednesday, but the real drama was in Treasurys and mortgages.

Oliver Quillia for CNBC.com
A New York Stock Exchange trader.

A selling spree in Treasurys pushed rates higher, taking the yield curve to its steepest on record as spreads between the 2-year and 10-year widened by over a dozen basis points on Wednesday alone.

The 10-year saw its yield move above 3.70 percent, after trading at 3.55 percent the previous day. The selling wave hit bonds shortly after 1 p.m., even after the auction of $35 billion in 5-year notes was well received.

"It was a great auction. It was just the follow through that was a problem," said Brian Edmonds, head of interest rate trading at Cantor Fitzgerald.

Traders are bracing for more of the same Thursday. The Treasury is auctioning another $26 billion in notes, this time 7-years.

The heavy issuance - more than $100 billion this week alone - has been pressuring the market.

Some key data will also get the market's attention Thursday, including weekly jobless claims, durable goods and new home sales.

 

[editec]

In the meantime, investors are going schitzo trying to find some safe haven for what's left of their money, trying to at least break even for the inflationary flood they know is coming.

Yet the price of gold went down?


GOLD
05/27/2009
17:15
948.30
949.30
-3.80
-0.40%
946.80
960.40
SILVER
05/27/2009
17:14
14.75
14.79
+0.14
+0.96%
14.51
15.05
PLATINUM
05/27/2009
16:54
1133.00
1143.00
0.00
0.00%
1125.00
1146.00
PALLADIUM
05/27/2009
16:01
223.00
228.00
-7.00
-3.04%
222.00
234.00

I don't understand the intricacies of the bond market but it seems to me that if the market was truly worried about runaway inflation the price of gold would be rising dramatically.

Thoughts?

 

[Oddball]

One day does not a pricing trend make.

Since the big sell off last fall -mostly caused by brokerages and hedgers selling off their reserves to pay off the panic sellers- the prices for metals have steadily been trending higher.

 

[Paulie]

In the meantime, investors are going schitzo trying to find some safe haven for what's left of their money, trying to at least break even for the inflationary flood they know is coming.

Yet the price of gold went down?


GOLD
05/27/2009
17:15
948.30
949.30
-3.80
-0.40%
946.80
960.40
SILVER
05/27/2009
17:14
14.75
14.79
+0.14
+0.96%
14.51
15.05
PLATINUM
05/27/2009
16:54
1133.00
1143.00
0.00
0.00%
1125.00
1146.00
PALLADIUM
05/27/2009
16:01
223.00
228.00
-7.00
-3.04%
222.00
234.00

I don't understand the intricacies of the bond market but it seems to me that if the market was truly worried about runaway inflation the price of gold would be rising dramatically.

Thoughts?

Inflation isn't going to be hitting us hard TOMORROW. It could be a year or even longer before we start to see the effects.

For traders, it makes little sense to tie up money in gold at this point. It's going to fluctuate between the high 900's and the mid 800's for while, so buy a little at a time when it dips under 900. That's the best strategy I can think of for gold at this point in time.

The MOST telling sign, is that it hasn't deviated much from its trading range. Most people who've been holding physical gold, still are. Keep what you had, don't bother tieing up a ton of money for right now, because there's still some time left to go before we start seeing the move higher for the longer term.

Also, don't forget, physical prices are much higher than the COMEX spot price.