Making Sense

“There’s a big difference between probability and outcome. Probable things fail to happen—and improbable things happen—all the time.” That’s one of the most important things you can know about investment risk.” ~ Howard Marks With Fed Chair's Front and Center focus on evolving outlook of the US employment situation , this week carried extra significance and the Employment data catalyzed the move in Yields. Yields on US2s fell 35 bps (High - Low Range) and on US10s 28 bps (High - Low Range) over the week . On US2s Yields, we closed right at 3.65% and on US10s at 3.71% which is in close proximity to the braking point we mentioned earlier in the backdrop of the larger H&S Formation. We did not get the upticks towards the 4.10% handle we were hoping for. Another Trade I had thought about and did not write was the break below the 3.90% - 4.10% consolidation range but that's because consolidation break outs many times chop you out so better to trade at the top of the consolidatio...

"Many of life's failures are people who did not realize how close they were to success when they gave up" ~ Thomas Edison Bonds made fresh highs this week as yields on US2s dipped to 4.411% and later bounced off lows to close the week at 4.517%. Likewise for US10s, yields closed at 4.241% after printing lows of 4.144% at the start of the week. US2s10s bull steepened to -22.2 bps before pulling back to close the week at -27.60 bps.  S&P saw sharp price correction as markets reversed off  5 642 levels. We identified last week that 5642 levels correspond to the 1.618% of the corrective move from 4820 to 3492 and is a level worth watching to see if prices stall here for a corrective move lower. On DXY we briefly dipped under the 104 handle to touch lows of 103.65 before closing higher on the week at 104.37.  The move in USD index could stall at the 104.50 levels or could stretch towards 105 levels. On the US2s we closed right at the H&S Neckline at 4.52%. The narrativ...

I am presently learning air rifle shooting and the first principle taught was "Do Nothing". You do nothing till the posture, the stance, the focus , the breath all align and then you slowly squeeze the trigger.... Even after squeezing the trigger you hold tight  and follow up your action to see the errors and then use that as a feedback to improve next time. Tomorrow's CPI data release is a bit like I don't know, could be this way or that way and look at the price, I don't know. The risk reward does not feel right and yada yada. A lot in trading is about "price" and the current levels are expensive for a break out trade in yields but neat for a bond rally. For me , the CPI release has a lot riding on it and a significant amount of bearishness is built into the price.  Overnight, the sell off in bonds continued unabated with the yield on US2s up 4 bps. US2s10s bear flattened 2.20 bps. US10s ended the session + 1.80 bps and US30s -0.60 bps. We saw strength...