Two days ago we reported that less than two weeks after getting stopped out on his WTI short, days after he was also stopped out on his Nasdaq short, “world-renowned commodity guru” Dennis Gartman decided he had had enough of boring, boneheaded assets, and decided to short the 10Y treasury.
NEW RECOMMENDATION: The bond market has rallied ever-so-slightly in the course of the past several days, taking it from being aggressively over-sold back to neutrality and in protracted bear markets neutrality is about all that one can ask.
We need to remember that the bond market is now two years into a bear market and that the supposed line-in-the-sand at 3% will prove ephemeral as the ten year trades to 4% and perhaps 5% over the course of the next two or three years.
We are sellers of the ten year here, willingly risking the yield to drop to 2.92 from 2.98 presently, and when the yield moves upward through 3.02 again we shall add to short positions.
As we write, the ten-year note future is trading 119 11/3nds.
What happened next was predictable: the 10Y proceeded to spike higher…
… and then it went higher, and higher, and higher, until this morning’s disappointing NFP print, which prompted some to – incorrectly – conclude that the Fed may be getting cold feet about hiking more.
Whatever the reason, however, moments after the NFP was announced the 10Y yield plunged, sliding from above 2.93% to below 2.91% in the span of milliseconds.
More importantly, recall from Gartman:
We are sellers of the ten year here, willingly risking the yield to drop to 2.92 from 2.98 presently, and when the yield moves upward through 3.02 again we shall add to short positions.
Well, he risked, again… and lost, again.
And just like that, Gartman was just stopped out for the 3rd time in 2 weeks. And now, 10Y yields can go ahead and soar.
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