{"id":21792,"date":"2013-08-22T09:13:14","date_gmt":"2013-08-22T13:13:14","guid":{"rendered":"http:\/\/www.ino.com\/blog\/?p=21792"},"modified":"2013-08-22T09:13:14","modified_gmt":"2013-08-22T13:13:14","slug":"fomc-minutes-head-for-the-hills","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2013\/08\/fomc-minutes-head-for-the-hills\/","title":{"rendered":"FOMC Minutes\u2026 Head for the Hills!!!"},"content":{"rendered":"

While the MSM instigates reasons why we should give a damn about what people who have little control over the T bond market were thinking at the last meeting, why don\u2019t we just tune it all out and manage the markets instead?<\/p>\n

\"tyx,<\/a><\/p>\n

The top panel shows the 30 year yield marching toward the traditional limiter AKA the 100 month EMA.\u00a0 The pattern measures to 4.5% or so, so there could be a spike above and a hell of a lot of hysteria at some point.\u00a0 That\u2019s the collective markets; 98% hype, hysterics and emotion and 2% rational management.\u00a0 Either the 30 year yield is going to do something it has not done in decades (break and hold above the EMA 100) or it is not.\u00a0 Simple.<\/p>\n

The relationship between long term bonds (30) and short term bonds (2) in the middle panel is currently negatively diverging gold as the ratio has dropped this month.\u00a0 Again, we wonder is gold (bottom panel) leading the curve this month or should gold bugs take caution?\u00a0 I think gold is leading the curve, but it bears watching.\u00a0 The relationship became distorted in second half, 2012.<\/p>\n

As for gold, it probably bottomed at the end of June.\u00a0 That is because the sold out condition of the sector (read: Paulson puking GLD, hedge fund net short positions, India\u2019s antagonism toward its would-be gold buyer citizens, etc. etc. etc.) was simply historic.<\/p>\n

Really, just dialing down all the noise of the last 2 years it was a grand and climactic panic IN to gold in 2011 by the global public in the face of the Euro\u2019s supposed Armageddon.\u00a0 Everyone had bought and then it was time for the bleeding out of this emotional money.<\/p>\n

The bleeding went on longer than I originally thought it would, but that is why we do ongoing work to interpret things every step of the way.\u00a0 Hey, no harm no foul.\u00a0 A little patience and ongoing perspective and now we have what appears to be a purified asset class, free of unhealthy sponsorship.<\/p>\n

Back to the chart\u2019s top panel.\u00a0 China is a net seller of T bonds.\u00a0 Japan is a net seller of T bonds.<\/p>\n

\"tics\"<\/a><\/p>\n

As we have been noting every step of the way T bond yields are a function of supply and demand.\u00a0 The global system endured a solid decade of net inflows of global funds into the T bond market.\u00a0 Now it appears the tide may be going out.\u00a0 Hence, interest rates all along the curve \u2013 save for the officially manipulated ZIRP on the Fed Funds \u2013 are going up.<\/p>\n

It is all normal to free market participants; just another phase.\u00a0 It is only abnormal if you buy in to the idea that the Fed is in control and can remotely operate the financial markets indefinitely; if you buy in to the idea that the Fed decides when the cycles are to change.<\/p>\n

If you look at it a certain way, it\u2019ll tickle your funny bone as you listen to Huey, Dooey and Louie jawbone \u2018Taper\u2019<\/em> in the media or as you review what a bunch of bureaucratic clerks had to ruminate about at the last FOMC meeting at 2 PM US Eastern today.<\/p>\n

Biiwii.com<\/a>, Notes From the Rabbit Hole<\/a>, Twitter<\/a>, Free eLetter<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

While the MSM instigates reasons why we should give a damn about what people who have little control over the T bond market were thinking at the last meeting, why don\u2019t we just tune it all out and manage the markets instead? The top panel shows the 30 year yield marching toward the traditional limiter […]<\/p>\n","protected":false},"author":35,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[1840,425,4978,251,4273,7948,1865],"class_list":["post-21792","post","type-post","status-publish","format-standard","hentry","category-general","tag-biiwiicom","tag-fed","tag-fed-minutes","tag-federal-reserve-board","tag-gary-tanashian","tag-guest-bloggers","tag-t-bonds"],"yoast_head":"\nFOMC Minutes\u2026 Head for the Hills!!! - INO.com Trader's Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ino.com\/blog\/2013\/08\/fomc-minutes-head-for-the-hills\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"FOMC Minutes\u2026 Head for the Hills!!! - INO.com Trader's Blog\" \/>\n<meta property=\"og:description\" content=\"While the MSM instigates reasons why we should give a damn about what people who have little control over the T bond market were thinking at the last meeting, why don\u2019t we just tune it all out and manage the markets instead? 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