Let's Talk About F, Babee

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We are in a sort of uncertain spot right now. If I am right, this correction in the stock funds is not finished. Maybe they are being held up a bit by the end-of-month attempt at window dressing. The stock funds are less overbought now. However, some technical indicators like the NYSE and Nasdaq overbought/oversold oscillators appear to have some more downside to go before showing better oversold levels. I am not certain how to play the bond funds. What opinions are out there regarding whether conditions will favor a sustained and better performance by the F fund (AGG) vs. the G fund?
 
Looks good for the "F" Monday may add more worries?

BOND REPORT
Treasurys rally after weaker than expected ISM data

By Wanfeng Zhou, MarketWatch
Last Update: 10:40 AM ET Dec 1, 2006




NEW YORK (MarketWatch) - Treasury prices rose sharply Friday, sending the benchmark yield to its lowest level since January, after a report showed factory activity in the United States contracted in November for the first time in more than three years.
The Institute for Supply Management reported Friday that its manufacturing index fell to 49.5% in November from 51.2% in October. The decline was unexpected. The consensus forecast of estimates collected by Marketwatch was for the index to rise to 51.8%. Readings below 50 indicate contraction.
This is the first time the index has been below the 50 threshold since April 2003, said David Ader, government bond strategist at RBS Greenwich Capital. "This is one of the criteria we want to see in order to say the [Federal Reserve] can ease."
The disappointing ISM data come a day after a report showed the Chicago purchasing managers index fell to 49.9% in November from 53.5% in October. Economists were expecting the index to rebound slightly to 54.4%. See full story.
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=TNX&siteId=mktw
Separately, spending on U.S. construction projects dropped by 1.0% in October, as outlays on private residential construction matched a low hit in July 2006, the Commerce Department said. The decline beat the 0.3% drop expected by economists surveyed by MarketWatch.
The federal funds futures showed that the Fed will cut its overnight interest rate target to 5% from 5.25% in the first quarter of 2007. The odds of a cut in March moved to 62% from just under 50% following the ISM release. The Fed has always cut rates when the ISM falls below 50% on a sustained basis. The market is also pricing in small odds of a further cut to 4.75% in May.
Several Federal Reserve officials including Chicago Fed President Michael Moskow and Richmond Fed President Jeffrey Lacker are due to speak later in the session.
http://www.marketwatch.com/News/Story/Story.aspx?column=Bond+Report&siteid=mktw&dist=
 
The Feds are out talking hawkish, trying to save the dollar. Lets hope the bond traders are smart enough to ignore this yak.
 
Sorry about that, bogus CNBC...What I thought I heard Gross say was that the Fed will have to start changing their rhetoric now to prepare for cuts in 07
 
FUTURESTRADER said:
Sorry about that, bogus CNBC...What I thought I heard Gross say was that the Fed will have to start changing their rhetoric now to prepare for cuts in 07
Click to expand...

I would completely agree with that. The F Fund will definitley do well that day. The big question is how will the market handle the change in rhetoric? A bear would say, "Yup, the Feds are now worry about the economy." A bull would say, " Yup, a cut in interest rates will help stimulate the economy and provide a soft landing."

My personel opinion is that the Feds went to far and will now be too late when they lower rates. A hard landing is coming. But unfortunately, I don't control the market. Right now, the bulls are running the show. And if you look at the previous recession, the market will rally on the initial rate cuts.
 
Today, bond yields are up across the board but the AGG was only down -.08?:confused:

I was expecting a 2-3 cent loss in the F fund.
 
I've never figured out how Lehman Brothers does their weighting but today, for example, the ten year bond lost 0.22% of its price while the two year bond lost 0.12%., so 0.08 % is a composite using many different bonds. On top of that, there has always been some flakiness in how the F-fund tracks AGG.
 
350zCommTech said:
Today, bond yields are up across the board but the AGG was only down -.08?:confused:

I was expecting a 2-3 cent loss in the F fund.
Click to expand...
I love the "F" fund.:mad: Yesterday made .10 and paid nothing must have FV from the day before?:confused: I'm out of the stinkin "F" fund COB today, so stick in there I'm sure it will be up at least 3 cents tomorrow!:sick:
 
nnuut said:
I love the "F" fund.:mad: Yesterday made .10 and paid nothing must have FV from the day before?:confused: I'm out of the stinkin "F" fund COB today, so stick in there I'm sure it will be up at least 3 cents tomorrow!:sick:
Click to expand...

That makes sense! It should have paid a penny yesterday, so today it's only down .08 instead of .18. Wow, this is almost like the I fund.:nuts:
 
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