The dollar

[swmnfarmer2878522]

Put in a higher low and higher high off the correction.  93 looks to be her rather quickly.  If it is really bullish the third wave should become very dynamic.  Grains should struggle under a rising dollar.

[sdholloway56]

Fairly impressive that it can continue a bounce while long rates are getting sold.

As far as what I consider the larger matter- the long bond seems fairly obvious in "yeah duh" retrospect.

The Fed has consistently messaged the commitment to $150B in monthly asset purchases.

Absent yield curve cramming, long rates are obviously going to be under strong upward pressure.

So I think what you saw at the end of the month was that the pressure became great enough that they Fed ran out of money. Now they have a new allotment.

The upshot is the same, it just takes longer. They'll probably need to concentrate their buying on treasuries, and on the long end. So what you'll probbly see first is credit spreads blowing out before T rates really go- they won't have enough money to keep buying junk.

BTW, I contine to see the DX rally as more of C than a 3. 

[sdholloway56]

BTW, $150B isn't a lot of money if "the market" gets seriously concerned about high future growth/inflation.

Although there are still holders who will be glad to have the Fed take those clunkers off their hands at a premium. As long as the money lasts?

[sdholloway56]

Speaking of E Wave, you could curently make a case that this little rally in bonds is just a correction and already seeing some age.

But it isn't a free market in the short term and only is in the long term taking into account the distortions of active intervention. 

I have no idea what the smart guys at the Fed are thinking. Could be they're thinking they have to prop the bond here and now or risk it getting out of hand. But if it were me- owing I have a lot less info and don't know their larger agenda- I'd go ahead and let the 10 yr rise to 2% and then make my stand there. Unless they're willing to commit a lot more cash to the operation then that may be the best they can do- they can cushion it but can't peg it.

[BA Deere]

Let`s not lose sight that this is the Dollar.  All we have to do is be slightly faster than these countries and the grizzly bear will eat them.

[k-289]

B  O  J   navigates  with  '''  223%  G  D  P   Debt   '''  leaves  US  asking ,  why  even  compare  Yen  vs.  $$$$$  -  -  -

That  being  like  comparing   Texas  ERCOT,   to  Mid  America  Energy  financial$   -  -  -  

[sdholloway56]

The 2001-9 Adminsitration of "those guys who we've never heard of" drove the DX to 70, mostly at the expense of the Euro.

I don't think any of our "partners" will let that happen again.

That's one reason why I'm skeptical of the "commodity supercycle" talk.

BTW, I don't see a financial crisis on the immediate horizon but in a crisis the senior currency always rallies- the dollar rose sharply in the heart of the GFC even though the US was the epicenter of the cockup.

[sdholloway56]

DX got swatted back a bit and grains are acting a little spunky.

BTW, if you look at the bounce so far, the first two legs were 3 wave, not 5 wave affairs on the lesser degree. That, and the lack of  completed 5 wave count down on the larger degree are why I'm interpreting this as an ABC correction rather than an impulisive move.

Looks most like a flat correction, which is a 3-3-5 configuration. So we've only just (probably) completed 1 of 5 in C. Ideally, C will ultimately extend to above the top of A- around 92 basis nearby spot futures.

[k-289]

Mother  nature  is  at  the  rudder  of  this  commodity  deal ,  most  likely ,  as  the  SW  Dry  migrates  East - N E - - - 

[BA Deere]

We`re living in interesting times, last week on Ebay a Dr Seuss book was worth 2 bushel of corn, yesterday the same Dr Seuss book was worth 75 bushel of corn.   

On a serious note, how many of us thought the old movie "Fahrenheit 451" was far fetched fiction?  Now they don`t even have to burn books in a ceremony, they push a button and the offending works disappears off of Kindle (for your own good of course).  Was there ever a time in history that banning books was a good idea?  How many encyclopedia sets were donated to GoodWill with the thoughts "aw, I can look up anything on WiKi".