the FED 's hand in the market

frog33

The Fed controls the markets by QE and buying 30 years bond, the following chart shows my speculation of when they do it.
spx, us dollar, gold and 30 years bond price weekly chart:

spx,usd, usb and gold weekly chart

the blue line tells us  the us dollar is too high and FED need to QE or threaten to qe, we know the bank bailout in 11/09 and the QE1 in 3/2010,
they might secretly open the backdoor euro bailout line at the end of June. When they are throwing money in the markey, it might be a good signal to buy
stocks.

the red line tells us the 30 years interest rate is in danger and FED need their bank agents to buy 30 years bond at any cost or else the system will be in
serious trouble(look at the H&S pattern in the $usb weekly). When this happens, they will sell any other assets to pop up the bond price. I consider it as
a good sell signal. of course it need to judge where the money flow goes, in current situation, the QE signal is just passed, investors moved out from us$,
the gold is in correction,  30 years us bond is in serious gap resistance, money might fly back in euro market, $spx weekly rsi is just over 50, uptrend is confirmed.

新人发帖，其实都是主观臆测，请各位多多指教

一

chenlx

The Fed controls the markets by QE and buying 30 years bond, the following chart shows my speculatio ...
frog33 发表于 2010-7-25 22:47

    zhichi

bendzhao

nice

6th-Sense

AGA7d

“the red line tells us the 30 years interest rate is in danger and FED need their bank agents to buy 30 years bond at any cost or else the system will be in serious trouble(look at the H&S pattern in the $usb weekly). When this happens, they will sell any other assets to pop up the bond price.”

frog33

回复 5# AGA7d


    Fed must maintain 30 years low interest rate by buying the 30 years bond at any cost( sell the stocks to force money flow back to bonds),  that is their main task for the recovery, if the bond price crash like greece, the system is in danger.

frog33

回复 5# AGA7d


    The Fed print money(QE), give it to banks, banks use it do the trading, when the bond price is falling(china is selling, bad loans default, this is where money disappears), banks liable to use the trading profits to pop up the bond price.

bucks

AGA7d

回复  AGA7d


    Fed must maintain 30 years low interest rate by buying the 30 years bond at an ...
frog33 发表于 2010-7-25 23:30

Greece is not a valid comparison here...

I agree that Fed needs to keep bond rates low, but saying 1% or even 2% rise from
current level is a big systematic risk would be an over-statement. 5-6% rate for
long bond is not high by historic measure.

In this deflation-outweigh-inflation economy, there is little risk associated with the
T-note auctioning due to the low rates almost everywhere. Even if Fed stay away
from the T-note market, I would think the long bond rate may go up .25 or .5, but
certainly not 1% at this time.

Additionally, the corporates are mostly financially sound (see my post on corporate
cash level) and do not need to raise much capital in the bond market, therefore, 1-2%
rise in bond rates won't be that a big deal. The difference in credit rating can easily
result a 5%+ in the corporate bond yield. (I know there are activities in the corporate
bond market, it is more likely the low rate stimulate the demand, not because corporates
desperately need the financing.)

Last, Fed of course will continue buying T-notes, maybe more MBS. But I don't see
a big deal out of it - the velocity of money is already low, and banks have plenty
money to lend but there are few worthy takers. Giving banks more money does
not do much except helping banks to take advantage of the yield curve.

frog33

回复 9# AGA7d


   老大很对，我只是臆测，30年BOND的头肩模式，跌下去会很惨，只是估计FED会干涉颈线。

sooners

回复 1# frog33


   

zhizhengwd

nice and thx

SAR

babyruth

netbanker

very informative chart