Friday, October 5, 2012

Pre-NFP comments

For those who only look at the treasury market (hey, don't judge..i used to be one of those people myself), the recent selloff might be taken as a sign of something (pre-auction concession, opinions regarding the NFP report, ect..).   However, if you look at the market from a cross market perspective (risk assets + credit), you will see that the moves in treasuries are simply matching the broader moves in these other markets.

With Oil coming back to ES and EUR....

Even credit, as measured by HYG and CDX HY S18, have moved back in line with the recent moves in stocks.

So, all this is saying is that the recent weakness in treasuries is simply the markets moving together with the seeming ebuliance in stocks (don't ask me why stocks are feeling so great...its QE, remember).  The only treasury specific price action that I would attribute to pre-auction concession is the steepening of the 7/10 curve and the 10/30 curve (both are 2 bps steeper over the past week).

So, pre-NFP I still would like to sell treasuries on a pop (assuming the jobs number comes in better that 90k).  If the number is a real disaster, then I imagine that I might need to wait until Monday to make my sale.

govttrader out...

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