Treasuries tumble, and traders are betting on more
The Georgia election results weren't received warmly by bond investors, who decided to sell first...and aggressively.
Futures traders are a bit sanguine, with speculators holding a minor net long position as of last week. Options traders, however, have seemingly been significantly more worried.
On Tuesday and Wednesday alone, more than 1 million puts traded on 10-year Treasuries. On Tuesday, there were over 4 puts traded for every call, the highest Put/Call Ratio in more than 5 years. Put volume has been heavy for weeks, so the 20-day average of the ratio has soared to nearly a record high, just below the peak from late 2013.
Other times when traders focused on puts over calls by more than a 2-to-1 ratio has preceded just-okay returns per our Backtest Engine. Returns were better for the TLT fund when the ratio was high, with 94% of days showing a positive return 3 months later.
What else is happening
These are topics we explored in our most recent research. For immediate access with no obligation, sign up for a 30-day free trial now.
- Results in 10-year Treasuries and the TLT fund after high put/call ratios
- Institutional investors have shifted to a heavy short position in this market
- Hedge funds have gone net short, too
- Even so, implied volatility in the bond market is at historic lows
- Seasonality for the 10-year is modestly positive at the start of a New Year
- What happens to Treasury prices when economic activity picks up
- Basic material stocks had quite a day on Wednesday
- There has been another historic surge in securities hitting 52-week highs
- What happened when other notables reached the "world's richest" moniker
| Stat Box On Thursday, more than 14% of securities on the Nasdaq exchange ticked at a 52-week high. That's the highest percentage of new highs in more than 700 days, one of the longest streaks in 35 years. |
Sentiment from other perspectives
We don't necessarily agree with everything posted here - some of our work might directly contradict it - but it's often worth knowing what others are watching.
1. About 54% of mom-and-pop investors expect stocks to keep rising in the months ahead, the 2nd-highest percentage in the past 3 years. [AAII]
2. When you're bullish, you gotta buy call options...right? [Bloomberg TV]
3. There are just no words. [Axios via Daily Shot]
