Bonds 01 (May 08 - Aug 10)

[LenaHuat]

Hi Winston

Thanks a million for your morning response.

I've juz edited my post when I realized a typo mistake on sentence (2).
I meant 'don't' and not 'do'. I track the Norway's SWF and Calpers' portfolio asset allocations. They have turned away from bonds and U are right, to various other classes. The global govt stimulus prog is working. I anticipate improving US employment figures. But not for Singapore.

[Chiron]

US 10 year treasury yield, based on chart, resistance at about 4 - 4.1%. Anyone here can recommend any bond ETF which I can look into?

Thanxs!

[mojo_]

10-yr U.S. treasury yield


Probably weak resistance at 4?

... due to fears of inflation... or/and... creditworthiness of Uncle Sam?

[winston]

US bond yields spark concern

By Michael Mackenzie and Alan Rappeport in New York and David Oakley in London

US long-term interest rates continued to push psychologically important levels on Thursday morning as investors worried about the level of national debt and whether the Federal Reserve might have to raise interest rates to combat inflation.

The yield on a 10-year Treasury note, the benchmark rate for US mortgages, rose 1 basis point overnight to 3.956 per cent, having hit 4 per cent during Wednesday after an auction of 10-year government debt failed to raise as much money as some had hoped.

“We are seeing traders draw a line in the sand at 4 per cent” on 10-year notes, said Tom di Galoma, head of US rates trading at Guggenheim Capital Markets. In recent months, auctions have often been awarded at higher-than-expected yields, with dealers and investors being asked to buy higher amounts of debt as the US Treasury seeks to fund a growing budget deficit.

http://www.ft.com/cms/s/0/68ca2d04-55f2 ... ck_check=1

[winston]

US 10 year treasury yield, based on chart, resistance at about 4 - 4.1%. Anyone here can recommend any bond ETF which I can look into?

Hi Chiron,

I think there's a Proshares UltraShort Lehman 20+ Year Treasury ( TBT ). There's also a thread on this ETF under "P".

I'm not vested so please do your home work.

Good Luck !

Take care,
Winston

[Chiron]

US 10 year treasury yield, based on chart, resistance at about 4 - 4.1%. Anyone here can recommend any bond ETF which I can look into?

Hi Chiron,

I think there's a Proshares UltraShort Lehman 20+ Year Treasury ( TBT ). There's also a thread on this ETF under "P".

I'm not vested so please do your home work.

Good Luck !

Take care,
Winston

Thanxs, Winston. Will take a look at TBT, after finding a few ETF play on bond with very limited price movement. Seems like now 10 year treasury yield has hit a wall at almost 4%, coming down and looks to be sustaining the downtrend

[kennynah]

technically, TBT is still on an uptrend....whether you look at it from daily or weekly chart..

when it hit a high of ~S$60, it was resisted, and surprisingly becos that was exactly the 61.8% fibo retracement resistance.

imo...although it is showing weakness now, it is not until it breaks the support at ~ $49 that we can technically consider it showing further sliding potential...

however, looking at the daily chart, the MA50 is now joint with MA200 and doing so from below the MA200 price... many technicians will have called this phenomenon, the "golden cross". It is given this nomenclature, becos, in the long run, this is can be a golden signal for bulls to cheong full steam ahead...

all the best...

[millionairemind]

June 15, 2009
China's US bond holdings fall

WASHINGTON - CHINA'S holdings of US Treasury bonds fell for the first time in 11 months to US$763.5 billion (S$1.11 trillion) in April, latest US government data showed on Monday.

The April figure, a drop from March's US$767.9 billion, was the lowest since the purchases started building up in June 2008, the US Treasury said in its monthly international capital data report.

The figures do not include the holdings of Hong Kong, China's special administration region, which climbed to US$80.9 billion in April from US$78.9 billion the previous month.

But the latest statistics showed China sitting comfortably as the top purchaser of Treasury bonds despite years of trying to diversify its reserves away from the US dollar.

Japan is the second-largest holder of US bonds, at US$685.9 billion in April. -- AFP

[winston]

The Bonds Bursting in Air By Dr. Russell McDougal

Most people spend far more time watching the stock market instead of the bond market.

That is an enormous mistake.

The global bond market absolutely dwarfs global stock markets. This flow of capital is essential to modern life.

The largest bond market in the world is represented by U.S. Treasuries. The dollar used to be the global reserve currency, and players from all corners of the earth trusted in the safety of U.S. Treasuries. But our newest administration plans to meet ongoing obligations, as well as new ones, by raising money through the issuance of new debt.

Try on the 50 percent number for size.

Yes, the U.S. budget and its gigantic deficits will require half to be paid by borrowing from anyone trusting enough to continue the sham. The current annual budget deficit is projected to be a record $1.75 trillion!

In a rush to "safety," global buyers panicked into short- and long-term U.S. Treasuries in mid-2008. 30-year bonds were bid up to the 142 level as interest rates plummeted.

But putting your money on their success is akin to purchasing shares of Fannie, Freddie, AIG, Lehman Brothers, and the entire spectrum of disastrously failed elitist-sponsored enterprises. Sooner or later, this market will implode and bring pervasive higher interest rates with it.

This beloved country has long been at the mercy of foreigners to buy our bonds as well as our stocks. China holds $740 billion in U.S. government bonds, and is just now closely inspecting the merchandise. The present verdict is "no more." The Treasuries are due for a bounce higher at any time, but this debt, as well as the dollar, is mortally wounded. Default will enter the conversation sooner or later.

Protect yourself with gold, silver, and other tangible assets.

[winston]

If the USD collapse suddenly, interest rates will spike. But where would the money go to ? Euro? AUD? Loonie? Yen? Swiss Franc? Sin$? Sterling? ?????

State Street: Treasury Yields to 4.5 Percent Soon

HONG KONG -- A flood of more U.S. government bond issuance after a record amount this week will likely push up yields to 4.5 percent within six months, according to the chief investment officer of global asset allocation for State Street Global Advisors.

U.S. Treasuries have been under pressure as investors look for higher returns in riskier assets and anticipate the implications of more new supply in the market. The yield on the benchmark 10-year note hit an 8-month high of 4 percent two weeks ago, but has eased back to 3.64 percent since then.

"I think we'll see 4 and a half in the next 6 to 12 months in U.S. governemnt bonds, because I think we will dig our way out of this complete panic and normalise and see positive economic growth at the end of this year," Alistair Lowe told Reuters on Wednesday, adding the firm had been underweight government bonds since November 2008.

Lowe, who also oversees currency portfolios, said he expected the U.S. dollar to continue declining as investors shift out of ultra safe bets into other currencies that would benefit from higher commodity prices, such as the Australian dollar and the Canadian dollar.

"We still think the U.S. dollar will continue to depreciate against most developed market currencies. Why? I think we will continue to see risk aversion gradually decline," he said.

However, Lowe played down the risk of the U.S. dollar losing its premier reserve currency status, saying central banks will likely diversify their currency reserves but that would not mean supplanting the dollar with any other unit.

State Street Global Advisors is the investment arm of State Street Corp (STT.N: Quote, Profile, Research, Stock Buzz). It had $1.4 trillion in assets under management as of March 2009.

© 2009 Reuters