alice

NFTRH; SOMA Enters the Equation (med. priority)

An alert subscribe reminded me that Thursday is Fed ‘SOMA’ day, which is a day that the Fed is due to sell another chunk of Treasury securities. Isn’t it neat how they are bidding T bonds up (in line with our short-term contrary view) as the Fed prepares to sell?

Reference the post at Biiwii on May 16 in which Kevin Muir highlights Martingale Macro’s observation of tough markets on Fed QT days.

Pink Tickets on QT Days

Here is the schedule from the NY Fed. For his part, our alert subscriber notes that tomorrow would be an important day for the market to stabilize or Thursday could get rough. I just find it very convenient – even poetic – that yields are dropping and bonds are popping into the event. Maybe on this sale most of the damage is being done in the run up to the sale.

fed soma

Regardless, we have our parameters on the stock market. If things get dynamic (i.e. even more volatile), the parameters can get harpooned in-day so let’s try to have a weekly close as the arbiter on bull/bear. But again, I find it pretty convenient that bonds are being driven up in price just as the Fed is about to disgorge another batch of ’em.