Wednesday, September 12, 2012

pre-10yr auction thoughts

The setup (UST selling) for today's auction has lasted 3 solid days post-NFP, with no real backtracking or short covering events.  So, there is a pretty solid short base going into this auction.

This creates a significant community of short traders who will probably cover their shorts in today's 1pm auction in 35 minutes.  This argues for a strong auction...probably coming on the screws  If i was going into this auction short, as all of my dealer friends are, i would be bidding thru to cover my short and come out flat.  I have a hard time today predicting the post-auction price action at the moment, so i'm not involved yet.

With the FOMC statement coming out just after tomorrows 30yr bond auction...that will be a much more interesting and difficult auction to trade.  More thoughts about that later today / tonight.

govttrader out.

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