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In early June 2007, Treasury futures saw their largest-ever put volume traded (821,978 contracts) and within a few days, Treasury yields had peaked at 5.32% and never looked back. Yesterday, according to CME data, Treasury futures put volume hit 758,020 contracts (second only to that 2007 high) as 74% of the entire options trading volume was in puts (and 88% of 5Y futures options were puts!). With the FOMC tomorrow and everyone seemingly convinced that the 'great rotation' is in place, it would appear the crowded trade is being bearish bonds.
I saw Pimco's El-Erian on TV this morning and the interviewer asked him about a rotation out of bonds and into stocks. He said they did not see it in their fund flows. I honestly don't know if this is a sign that rates are about to head lower again or not. I do know there are a lot of bond bears out there. I guess we will see.
This is another chart I have never seen before, but it is pretty interesting.
The author of this chart did not say what was used to measure the over bought/sold nature of the market. However, I have to say that most of the time the indicator pushed the 0 line, the market topped. It was a little early in late 2010 though. It looks like it is in a warning area now.
Are gasoline prices set to rise more?
It is interesting that retail prices are lagging the rise in wholesale prices and the price of oil. It looks like the wholesale price is the highest it has been yet. Are we headed to $4 again? That might be a drag on the economy should that happen.
This is an interesting long term chart of the Dow.
Isn't it funny how the market works sometimes. Will it get rejected again or break out above?
Here is the latest ISM manufacturing data.
It looks like Sandy has finally hit the manufacturing data. There was a lot of damage in a very populated area. There was much to replace with insurance money. A short term bump is to be expected. I really don't know how to tell if we have a real recovery building in manufacturing or not. This is really important data, but Sandy muddied the water. It will be interesting to see how the regional surveys look this month.
Here is the exports index.
The exports index has been in expansion for two months now, but just barely. It continued rising in the early part of last year. Will it do that again this year? That would be a good sign the global economy is picking up again. I think it is too soon to tell for sure.
Bob
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