U.S. Treasury Shorts Pounded into the GroundInterest-Rates / US Bonds Mar 08, 2016 - 04:33 PM GMT
This has got to be a decline for the records. There is nothing else like it in this chart. The treasury shorts are getting nailed.
ZeroHedge reports, “Over the past week we have been following a disturbing development in the US Treasury market: while the repo rate on the 10Y has been sliding deep into negative territory for a while, on Friday it finally hit the "fails charge" of -3.00%, suggesting there is a massive shortage of Treasury paper as a result of wholesale shorting by various market participants.
Back then we explained the move as follows: "[as of this moment] the repo rate can't go any lower, and any demands to cover Treasury shorts are met with "Delivery Failure" notices. For those who are unfamiliar, a "Delivery Failure"occurs when one party fails to deliver a U.S. Treasury security, Agency Debt or Agency MBS to another party by the date previously agreed by the parties (Sifma has more). It also means that there is an unprecedented (and based on the historical data, record) amount of shorts who would rather pay the fails charge than to cover their positions on the delivery demand, or alternatively, there is simply not enough Treasurys in the private market that are not locked up in short positions. Finally, this means that the panicked scramble by various entities, including central banks, to short US Treasurys continues unabated."
…and so it goes. The final plunge in TNX may come from Treasury shorts getting pounded into the ground.
Our Investment Advisor Registration is on the Web
We are in the process of updating our website at www.thepracticalinvestor.com to have more information on our services. Log on and click on Advisor Registration to get more details.
If you are a client or wish to become one, please make an appointment to discuss our investment strategies by calling Connie or Tony at (517) 699-1554, ext 10 or 11. Or e-mail us at email@example.com .
Anthony M. Cherniawski, President and CIO http://www.thepracticalinvestor.com
As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals
Disclaimer: The content in this article is written for educational and informational purposes only. There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.
Anthony M. Cherniawski Archive
© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.