As 10-year treasury yields rose above 2 percent Friday, one “Fast Money” pro made the contrarian call to buy.
Jeff Kilburg, senior development director at Treasury Curve, said that the bond market retreated on optimism over a Greek bond deal ahead and called the possibility of quantitative easing next week from the Federal Reserve unlikely.
“I think right now the market is currently pricing in QE3,” he said, noting that QE1 gave the S&P a boost of about 600 points and QE2 added 300 points.
The S&P 500closed up 0.07 at $1,315.38.
With a gain of about 150 points since Nov. 25, Kilburg doubted the S&P could maintain it.
“I don’t see this being sustainable if some kind of European event falls short,” he said.
More realistic was a pull-back to about $1,265 with treasury yields heading back to the 1.80 percent to 1.85 percent range, Kilburg added.
“Right now we’re going to see a little bit of a pull-back in the equity market near-term,” he said.
“I would’ve thought we couldn’t hang above 1,300 this long, so I think it’s going to break,” trader Steve Grasso said.
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Trader disclosure: On Jan 19, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Grasso owns ASTM; Grasso owns AVAV; Grasso owns BA; Grasso owns D; Grasso owns LIT; Grasso owns MHY; Grasso owns PFE; Grasso owns PRST; Grasso owns S; Grasso owns WFT; Grasso owns XLU; Dicker is long SLB; Dicker is long BHI; Dicker is long HP; Kinahan is long C; Kinahan is short GS; Kinahan is long XLU; Kinahan is lng CSCO; Kinahan is short YHOO puts; Kinahan is long MSFT; Karabell is long AAPL; Karabell is long IBM; Karabell is long GOOG
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