Top Takes From RealMoney

The RealMoney contributors are in the business of trading and investing all day on the basis of ongoing news flow. Below, we offer the top five ideas that RealMoney contributors posted today and how they played those ideas.

10-Year Treasury Back at Key Level

By Tom Graff
7:50 a.m. EDT

The 10-year Treasury is struggling to pull away from 3.48% in either direction. As long as the credit markets remain weak, I'd say a rally is more likely in Treasuries than a selloff.

When most large investors sell corporate bonds, they immediately buy a duration-matched amount of Treasury bonds. In fact, it's so common that sell-side traders will assume you're doing this unless told otherwise. Thus, selling in corporates directly creates demand for Treasury bonds.

Yesterday all I heard about was how many buy-side traders wanted to sell and how little sell-side traders wanted to put bids out there. Unless something changes, that means there is latent sell-pressure on corporates.

I've written before that credit ETFs (iShares iBoxx High Yield Corporate(HYG Quote), SPDR Barclays Capital High Yield Bond(JNK Quote), iShares iBoxx Investment Grade Corporate Bond(LQD Quote)) were good proxies for how well credit is doing overall. But in the last two days, these funds have clearly not been following the direction of the overall credit market.

Long LQD, but in a severe underweight position

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Morning Prep

By Ken Wolff
8:42 a.m. EDT

The PowerShares QQQ(QQQQ Quote) was trading up before the jobless claims numbers from $39.30 to $39.51, then dropped to $39.30 on higher-than-expected claims numbers. ... This will create some negativity at the open, and we should drop, then buyers should come back in and resume what they started yesterday. ... Normally on a gap down such as what we saw yesterday, I would have expected early buying, but not as much as what occurred. It means that most traders feel the pullback is over and want in on a new leg up. ... This is not a normal-looking market, and I would not be surprised at anything I see today...

No positions

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