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The Power of III
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Important Market Ticker post here today (31Jul09) about the dollar currently getting trashed and gold skyrocketing as the GDP numbers for 2Q also show a revision to 1Q GDP of a -6.4%

Link: The Market Ticker

http://market-ticker.denninger.net/archives/1278-Uh-Oh....-GDP-Interpretation.html

Excerpt:
What is this all telling us?

It appears to be that traders in the FX market (who by the way tend to be smarter than the average equity or bond trader) have deduced that the entire "improvement" in 2Q GDP came from government spending.

Well that's not hard to figure out - it did.

They also appear to be making a bet that the US Government will attempt to continue this, along with The Fed monetizing the debt through its buyback programs to destruction of both the government and currency.

This is not positive for our economy. At all.

But this is the meme today - traders are piling into bonds expecting more Fed buybacks, they are shorting dollars like crazy, and Gold is of course reacting to these two facts.

This is a "collapse of government due to spending into bankruptcy" play folks, or at minimum "currency crisis around the corner."

Right or wrong this is the trade being put on in size; the dollar selling in particular is especially pernicious and troublesome - that chart is essentially straight down since the GDP release this morning.
 
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Can somebody please translate the following line from the article that is linked above into english for me: "10 year bond futures are skyrocketing (yield collapsing); the yield gapped under a "must hold" trendline this morning and has continued down since."

The first thing I don't understand is if bond futures are skyrocketing, what does it mean for the yield to be collapsing? What is a must hold trendline?

Thanks.
 
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