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The Crash of the Bunds – Long v Short

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BUNDFG-D 6-4-2015

(1) Marty, are there any key downside support levels we should be paying attention to here? That call from your computer model warning us to look out below several months ago, all while the Euro Bunds were continuing to rise and setting new lows for yields, is absolutely remarkable!
(2) When you said sell the bunds and buy the treasury, the spread was 180. It now broke 150. You computer seems to really watch everything everywhere.                                                           Best Regards, and Many Continued Thanks!
Great trade
REPLY: Yes, this is all about tracking capital flows. No individual can watch everything everywhere and this illustrates my point about analysts who are only focusing on one market or domestically. You cannot forecast anything in isolation.We now have cash scurrying from the long into the short end of the curve; this may last into 2015.75, creating the illusion that all is well and rates are still falling on the near-term. But the long-term appears to have peaked with the May target. So far, each piece is falling into place. We still need to watch a few more markets to complete the setup for 2015.75.

BUNFOR-M 6-4-2015

The bund trade has been the bet against the euro, but Merkel is not about to abandon the euro. Discussions about changing the rules for Greece and consolidating all the debts of member states were fundamentally pointing to the bund trade reversing as well.

BUNDFG-W 6-4-2015

Currently, a weekly closing below 15020, followed by a monthly closing below 15068, will warn of a further break to the downside. June was a Directional Change and July is a key turning point, so everything has been on schedule so far. Break that channel and you will see the Sovereign Debt Crisis. You can see that our Energy Model peaked in February, warning that the upside was not sustainable with such a divergence.

BUNFOR-W 6-4-2015

Here is the weekly array. This will provide guidance for the turning points ahead on a week-by-week basis.

This is the entire reason behind the Global Market Watch. This is a tool we use to provide the biggest clients with global portfolios. Since the computer is constantly monitoring everything at all times, it allows you to see the world at a glance. No analyst can do that. In addition, the computer is never tired, sick, had a fight the night before, or distracted by romance. The computer is consistent and chugs along on its merry way. It may not be 100% perfect, for like a child it is always learning. It still is finding patterns that have not shown up before, so it learns as it develops.