7-29-09

Interplay of dollar, commodities and bond. 

1. first of all, dollar is strong, which is the direct results of the overnight poor showing of china market (drop more than 5%).  whenever there is trouble, the dollars are still perceived as a flight to safety.

2. but the poor showing of bond auction (http://www.cnbc.com/id/32201716) should put a damp on the optimistism on the dollar.   this may partially explain why TLT closed below the high of the day.

3. the oil dropped, this is because:  a). stronger dollar,  b). incresed inventory.

Dollar and oil are all in an inflexion point.  if tomorrow's first time job claim is below estimate, and another poor showing of treasure auciton, we could see a rebound of Euro, and loss of bond and may be a rebound of oil/commodities. The commodities is by no means certain to rebound,  this is becuase it is also coorelated with us economy.

so, the better way to trade (short term) is to short bond, especially short term. 

if yield is increasing, it may impact real estate/financial as well.