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Bonds and Gilts

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German Bund is just going higher and higher.

Most Bonds are up (blue) today with the German Buxl up 107 points at the time of this post.

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The German Bund hit 16827 today. The chart below is showing the narrative of how effective a 'long' trade this was and still is.

Bund_20190513_18_40.png.5aa4507f4fd613878d5ea875d4775afe.png

The price does not lie and the chart does tell the truth. With so much political and economic uncertainty around the world, Bond prices are telling us a story which they are predicting about the future. 

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German Bund is up another 50 points today and is hitting new highs as we speak. German Buxl is up 181 points. All Bonds are up and in the blue apart from the Italian Bonds. 

When you now look at the major indices then you can clearly see that Bonds tend to move up more often than not when world stock markets are declining. When one understands the relationship that Bonds have with Equities then one can appreciate the trading opportunities that this asset class offers.

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I have just read this article and I am astonished at the sheer ridiculousness of it. How can a trader (must be classed as a professional) for it to even be possible to make such a loss on German Bonds. If you just look at their charts then they are so bullish and have been for a while. It does not take an intellect to work this out.

One of my trading philosophies is to never bet against the trend as odds and probability are not likely to be in your favour. 

Another famous saying is to never bet against the German Bund!

 

Betting Against Europe's Safest Bonds Costs Trader $22 Million

https://www.bloomberg.com/news/articles/2019-05-16/betting-against-europe-s-safest-bonds-costs-trader-22-million

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The US Treasury Bond is up 168 points and 1.13%. 

The US Ultra Treasury Bond is up 259 points and 1.55%. 

They are the stand out performers today but Bonds in general have been in the blue and performed well today.

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Well Bonds are all up and in the blue this morning. 

The Bond prices are telling a story / narrative to us about the future. It can be used as a warning indicator / risk barometer. Just how far in the future I do not know as it could be six months or more.

Bund_20190603_09_48.png.4a61e3fa8633fa0898b530895b1f7e3a.png

The 'daily' for the German Bund paints a picture that we can interpret in many ways. One way is that there is economic and political uncertainty ahead which is being priced into the Bond market.

 

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Bond prices are continuing to climb and the German Bund on the 'daily' is looking strong. 

Bund_20190614_16_52.png.49a409f0d8cbf478a4e69cfc65aca8c1.png

Gold is also moving upwards right now and has been generally in an upward trend since August 2018 but the German Bund began its move before Gold. Bonds are a very interesting and important asset class to follow even if you do not trade them. Even if you trade Equities or Commodities then Bonds can give you a feeling of the risk appetite and mindset in the markets. 

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The German Bund and Bond prices in general are rising which is not a good 'Economic Indicator'

The chart below highlights the price action of the German Bund.

Bund_20190618_18_25.png.52b44a7fcb6ccfe3d4b04cf1e2a98d12.png

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The German Bund hit 17320.20 today.

This price action is sending a warning signal to the EU about if the UK were to exit the EU on a 'No Deal' scenario under WTO rules. This would impact the EU more than is being reported in the UK press.

Even Boris Johnson is now saying that he would try and negotiate a deal if he became Prime Minister rather than suggest like he was before that the UK are leaving and are not going to try and negotiate a new deal. 

If you look at the UK Long Gilt, the US Treasury Bond and 10 Year T-Note then you will see that we are being warned of potential trouble ahead. It is hard to understand the current price action as US equities are making new highs and so there is a mixed signal being presented.

It is a great battle between Equities and Bonds. One will emerge the winner but right now they are both pretty even though equities had a big blow in an earlier round near December 18.

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The German Bund hit 17361.60 today.

If you look at the price action from the beginning of 2018 to now so over one and a half years then it gives a great example of a trending asset. Add leverage to what is perceived to be a less volatile asset class and you have a nice trend to ride.

 

Bund_20190731_21_30.thumb.png.6e9e60636f9853d027f5acc9ca34d956.png

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Both the German Bund and German Buxl have performed admirably today. 

I attach the 'daily' chart for the German Buxl below:

Buxl_20190801_20_53.thumb.png.eac92760e08482a533d9bee6041532c7.png

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A lot of traders and investors ignore Bonds as either they do not understand them, do not want to pay the margin requirements or costs associated with them or it is not something they pay attention to. Bonds have been a great asset on the long side over the past two years. 

A well diversified and balanced portfolio is likely to have some form of allocation to Bonds. They are a great defensive asset in times of uncertainty.

I wonder if they conform to the rules of Fibonacci and Elliott Wave Theory? 

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I think it would be prudent in times of uncertainty and volatility to keep an eye on Bonds as they may be able to help indicate to us what may lie ahead. 

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Trend-following bond traders get fingers burned as Treasury yields surge

https://www.marketwatch.com/story/trend-following-bond-traders-get-fingers-burned-as-treasury-yields-surge-2019-09-11

Bonds have been ignored by a lot of traders but from a trend following perspective they have been an excellent asset to trade over the past year or two. 

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The German Bund is still performing pretty solidly in my opinion as the chart below 'daily' highlights. 

Bund_20191004_19_48.png.7d1f7c20513772381a4c5d0c1051239f.png

I think negative economic news around the globe (especially from major economies like the US and UK) could drive the price up further and positive news could push the price down lower. It is at a critical juncture right now. For those of you who are in long positions then it may be prudent to wait to see how the price behaves as no one can be 100% sure at this moment due to the potential economic risk out there right now. There is talk of potential US and UK recessions and this would be enough in my opinion to drive the price up further. 

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Bonds have had a great day today and I expect Gold to follow its lead. 

The question for me now is whether Bonds have much further upside or will we see 'Trend Exhaustion'?

Bund_20191126_19_07.thumb.png.6cd54aa565bf3b0538dfed20d7153a4a.png

As the chart above shows the trend has clearly weakened. Yes there will be profit taking, new shorts opening and stops being triggered. However, are we going to see a continuation of this downward move or will Bonds consolidate and ready themselves for a further move upwards?

When you zoom into the 'daily' and examine the current price action it does seem like there could be a further drop downwards but I think 'Economic and Political' activities may play a part in the next direction.

Bund_20191126_19_08.thumb.png.dd1a993ab2fcfc4bcd9f71e944f5f595.png

 

Bonds are poised nicely with a bit of uncertainty. 'Licence to Move' upwards has not yet been granted. 

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The US Ultra Treasury Bond has delivered some impressive price appreciation in today's trading session. 

2127676300_UltraTreasuryBondDecimalised_20191203_19_50.thumb.png.dada986af8de300d3e7ef23caaa5706b.png

If the US-China scenario does drag on until November 2020 (we don't know for sure that it will) then Bonds could have more upside left in the tank. 

Edited by TrendFollower

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