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bonds fed Macro Tourist QE

Trader Reminds You: ‘Tomorrow Is Another QT Day’

"But here we are, with tomorrow (Wednesday August 15th), having just a shade over $23 billion of bonds expiring."

By Kevin Muir of “The Macro Tourist” fame; reposted here with permission

KM1

Although I have a theory that on Quantitative Tightening expiry days the stock market is weak, the last two haven’t worked out.

KM2

To be fair, I warned you about this past one as it coincided with the day before the FOMC meeting – a period long known to be subject to abnormal stock market strength due to the FOMC drift.

But here we are, with tomorrow (Wednesday August 15th), having just a shade over $23 billion of bonds expiring.

KM3

So even though I am not one to hop upon the “world-is-ending-because-of-EM-contagion-bandwagon”, I am taking a flyer on the short side for tomorrow’s trading.

Recently QT expiry days have coincided with month-end and it will be interesting to have a large redemption day occur on a more “regular” trading day. It will be a great test of the theory in a more “pure” environment.

Don’t mistake this punt as a change of heart to the bearish side. It’s purely a one-day-trading position.

Let’s hope it’s not three in a row as that cat looks really mean…

KM4

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2 comments on “Trader Reminds You: ‘Tomorrow Is Another QT Day’

  1. Kevin,
    Many pink tickets out there – hope you had the correct ones.

  2. Why not describe the behavior as a statistical distribution? +0.08 isn’t exactly bullish, so really you only have +1.38% and maybe +0.49% as candidates for supporting any argument. Both of which happened end-of-month, for whatever that’s worth.

    The rest could be easily attributed to noise.

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