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The Short Treasury Blowtorch
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ahhhh +1.03 TD the story may turn into a squeeze that pancakes the curve. We will continue to feed the pig as cheap as long as possible...
Like gold, this is only a crowded trade as compared to recent past crowds.
I would challenge anyone to show lay persons with either holdings.
Go to a supermarket in Florida and you won't see too many people buying emergency candles and gallons of water. Go to the same supermarket in the days leading to a large hurricane and everyone buys these items.
In the bubble of Zerohedge et all, we see a future of inflation and rising rates. The larger public is just as ignorant about the two as they were about mortgage issues in 2007. Sure they may hear about it, but none of them are effecting financial transactions.
Other than when people flee they buy the US bonds because they know we will print till they are paid (or just rolled over)... which in concordace with low rates is good for the bullion... works more than one way...the rate rise would likely be a function of the supply first- and the fed will likely go with monitization first. Ted spread is alltime hights- potentialy a way to play it... pancake... Japan
> "In the bubble of Zerohedge et all, we see a future of inflation and rising rates. "
...except for those of us who see deflation and consumer prices plunging. (And rising rates)
Good analysis. Shorting bonds on a buy and hold basis has been and will be a loser for some time to come. There will be some great ST trades in this however. So this is a pro trade and not for the faint of heart.
The other side of the coin is also worth noting. If you buy the 10 year today and pay taxes on the income you are a CERTAIN loser after inflation.
You want yield? But the new Cali bond. 5.7% yield and no fed tax makes it ~9% equivalent.
Good point about the long side.
Finally gold has decoupled... Up over 1%
It was beaten down last week in anticipation (manipulation?) of a big move up concurrent with this weeks Fed meeting.
Remember the S&P can't be more than 100 points lower than Gold or the whole house of cards we call an economy comes crashing down.
SAD
I tend to agree. Compared to gold, this is a terrbily crowded trade. Lay people are constantly asking me how to get short on treasuries. That's scary. So, I'm long gold but never short treasuries.
How's TBT working out for MHFT?
since tbt is a daily double inverse the buy and hold strategy isn't good. I do find I have had great trading success with buying tlt, and tbt depending on where the indicators are pointing me.
This trade follows the indicators fairly well, Unlike spy, etc.
But...but...but...Nassim Taleb says it's ok! Black swa.....guys? Guys?!
agree on this 100%. Yields will NOT be allowed to rise. I cant bet against the equity markets anymore, and havent for months. But, i am long long bonds at these levels, absolutely. it is the ONLY trade that gets you on the side of the Fed while being risk-averse and a deflationist. they will engineer a market crash before they let yields rise very much.
"Don't mess with a cornered rat".
"It will go on until it doesn't".
Pretty much says it all. Explains everything since 3/09.
They will not stop. Everything that's deemed a headwind
will perpetuate the madness.
*This* is the new normal.
TBT has not worked for me.
It looks like above poster was right about TBT strictly being a short term play.
I guess gold is about it re playing against .gov.
The cost of carry is lethal and low rates are a "national security" priority. If you like pain, you'll love shorting Treasuries.
TBT, like all levered and/or short ETFs has mathematical issues that make it harder and harder to win longer term even if the market goes your way.
Deflation will rule for some time. Buy TLT.
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