Sep. 3, 2013
September JGBs
Current Position: Short
Long Term Bias: Short
JGBs look almost ready to break out towards new lows (high yields) following the fresh triangle break in Yen. We all know that eventually all JGBs will be just about worthless as the monstrous, rapidly growing government debt burden finally overwhelms the monetary and fiscal authorities, but that day is still probably a little ways off. Nonetheless, attitudes towards JGBs among both Japanese savers and institutional investors are shifting, and after the epic bearish reversal witnessed back in April the market looks ready to resume its new bearish trend.
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I’m a little short September JGBs and intend to add to the position on a confirmed break of this multi-week consolidation.
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The first important level in this contract is this 143.85 zone and I like adding to my short just below there. The next important level is 143.50 and a break below there adds weight to the bearish call. This market has the potential to move quickly and violently, however, so traders need to monitor this market very closely and have a few contingency plans and exit strategies worked out ahead of time. I will maintain a small, core short, just enough to stomach the volatility, and will plan to trade around the margins a bit on the shorter time frames.
Happy Trading!
