Treasury Trading Update.

Recently I read a report where there were two significantly opposing views on where interest rates were going to be at the end of 2010. Specifically the rate being discussed was on the US 10yr. note. Goldman Sachs citing potential for continued sluggishness in the economy and very bad employment picture put the rate @ around 3.25% I believe. Morgan Stanley on the other hand felt that rates would be forced higher due to all the supply coming forward and had a target north of 5.50% I believe. Personally I would lean towards Morgan Stanley as a lot of the data I read and current chart patterns seem to indicate potential for serious move higher in rates. However Goldman’s point about the economy is not without merit, and if the Government decides to “explicitly” signal dissatisfaction with climbing rates in the longer end of the curve, then we could see rates kept artificially low as we did in 2009.

Anyway yesterday you see a fairly good sized bet executed by Goldman in 30yr. options (see chart below). The trade is not without merit as technically the market looks to have put 3 phases in to the down side. Chartists will then look for retracements of the move down, and just plotting the 50% pull back would take the Mar. 30yr. contract to 11829. It is a decent counter trend trade in that paying 11/64ths. could easily be worth twice that as long as the move up is fairly brisk. It may be worth a second look, or similar counter trend moves.

Otherwise happy New Year wishes to all, I sincerely will not miss 2009 all that much and will remain hopeful for a better New Year, God willing. My best to you and your families.

 

Balane of players from Geocities

30yr.
House	Buy/Sell	Quantity	Strike	Price	Futures
560	Bot	500	G18c	28	^11516
560	Bot	1500	H16c	142	^11514
350	Bot	5000	G20c	11	11513-4
690	Bot	500	H15c	222	11524-5
10yr.
560	Sold	500	G16 Strdl	145	^11522
830	Sold	500	G14/17+ Combo	3	^11522
714	Bot	1000	G+14/-17+ Combo	3	^11522
287	Bot	1000	H17/19c 1x2	19
714	Sold	700x2100	H18c (once) with G14p (three times)	42
714	Bot	700	H11+/14p	39
374	Bot	500	G17/18c	12
684	Bot	1000	G16/17c	21
560	Bot	2500	H16c	102	^11522
370	Sold	1000	H15p	56
370	Bot	500	H14+p	46	^11522+
560	Sold	500	G16+/18c	21
287	Bot	2000	G17/18c	12
714	Sold	1000	G14p	15
560	Bot	1000	G14p	15
684	Bot	1000	G+14/-17+ Combo	Even
714	Bot	1000	G14/17+ Combo	Even	^11521
287	Sold	1000	G15+p	41
660	Sold	2000	H15/16+ Combo	1	^11524+
FF
825	Sold	200	K75p	8	K9972-2+
287	Sold	100	M75p	12	M9967-7+
287	Bot	200	K75p	8	K9972-2+