Thurday's Trade

You could not ask for more perfect conditions to favour GBN.V shares than today.

Gold prices up due to negative nominal yields on the German 1yr. Bund, and the three-month U.S. Treasury. This benefits the fundamentals of any gold mining operation.

Long bond prices down and yields climbing. This benefits GBN.V shares in particular, because of the intermarket relation between equities and bonds.

GBN.V shares traded inverse to the decline in long bond prices at the open, but sold off once again when the bond price steadied, just above the 141 mark. Should bond prices fall below 140, than a whole chain of put options will be set in motion. GBN.V shares are not 100% inverse correlated.

What is happening is that people are waiting for the other shoe to drop. Sell-side brokers simply don't get out of bed in the morning unless there's a 5% move in the markets.

Mostly ppl. will believe that the latest central bank intervention pertains to them, and that government provided liquidity will benefit only their position. So the futures might be bid up while actual bond prices decline. The intervention is meant to keep rates from going negative at the short end of the curve, though The Fed is supposed to both sell and buy 30-year bonds on Friday.

Probably get a mixed picture for the rest of the week, though the long bond is off by ~5% from its peak in September. If the price move does not occur in the morning, then likely it will be overnight.

http://quotes.ino.com/chart/index.html?s=CBOT_ZB.Z11.E&t=&a=&w=&v=i