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| Daily Jurojin - Friday, May 8, 2009 |
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Friday, May 8, 2009 Long term interest rates crackWe like to cover all the bases here at the Daily Jurojin. Our remit is to monitor global activity and find ways of playing the themes. We pride ourselves on piecing things together and adopting the appropriate strategy in our commodity and forex trading service, Jurojin Weekly. Events and core positions sometimes take months and weeks to come to pass, but there are times when, as traders, we can see what's coming and try to predict the appropriate instrument to take advantage especially when the odds seem stacked so much in our favor.Thursday was a crucial day for currencies and rates of interest. The Bank of England surprised the market by aggressively expanding the amount of debt it would buy as part of its quantitative easing strategy. It left rates at an all-time 0.5% low. The European Central Bank cut rates a quarter of a point to 1% and said it might spend money on high grade corporate debt. But while the central bankers have been coniving behind the scenes to unclog the global creidt markets in an effort to spur lending and thereby boost economic activity, we here in our Dojo have been getting steadliy more pessimistic on interest rates. We have been predicting a substantial back-up in yields for several weeks. Heres what we said to subscribers to our weekly futures trading service more than three weeks ago. At that time the 10-year yield wasa about 2.75%. "We see yields reacting to investors' decision to buy equities and we predict an excursion back above 3% for the first time in several months. And when they break, as investors invite a response from the Fed, we think they'll be on a fast-track for 3.25%. So we're selling the June T-note..." The Supreme Council of the Secret Order of Jurojin |
