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Beware the steepening yield curve in U.S. Treasurys, warns Pimco's Mohamed El-Erian. Despite...

  • Thursday, August 9, 2012, 7:56 PM ET
    Beware the steepening yield curve in U.S. Treasurys, warns Pimco's Mohamed El-Erian. Despite their staunch credentials, El-Erian notes the spread between the two and 10-year Treasurys is the widest it's been since May. “What we would caution is rather than the level of the rates, the shape of the curve.” he says. “The long end is exposed to a lot more risk.”
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This news story has 10 comments:

  •  
    Did anyone notice the break down in the TBT vs the 10 & 30 yr move in interest rates today? It should have had some thing like 2X the move it saw today if it's truly a double.
    9 Aug 2012, 08:08 PM Reply Like
  •  
    You need to read the fine print, my friend.

    Once these things are issued, and the issuer has the money, the market decides what the price of the ETF will be; not what the theoretical value might be. There is NO arb to keep it 'honest'.

    Remember when one of the VIX ETF's collapsed, even though the vix was rising?

    These things are just one of the many land mines that are out there which one day, when you least expect it, will rear their ugly heads and everyone will say, "how could this happen?"

    The other thing which they are saying now, which will never happen, is 'i can get out in time' and 'i can hedge when the time comes.'

    Caveat Emptor. These ETF's are NOT what you think they are.
    9 Aug 2012, 09:15 PM Reply Like
  •  
    Yeah that's very true, I also remember the break down of the VXX vs. VIX!
    9 Aug 2012, 09:17 PM Reply Like
  •  
    10 and 30 year yields moved lower by several basis points in the afternoon - that's why TBT fell late in the day.

    There are a lot of issues with TBT, but its relation to TVIX (the VIX ETN that collapsed) isn't one of them.

    TVIX was an ETN and traded far above NAV - this is what allowed the collapse even as VIX didn't do anything.

    TBT is an ETF.

    Translation of El-Erian: the long end of the Treasury curve is a lot riskier than the short end. Wow. What would we do without him.
    10 Aug 2012, 06:57 AM Reply Like
  •  
    Yeah, and like I said: is Bill Gross shorting the long end again? Cheers.
    9 Aug 2012, 08:35 PM Reply Like
  •  
    BOND has been wonderful but I am out as of yesterday - trend break
    9 Aug 2012, 09:02 PM Reply Like
  •  
    WTF is he complaining about. The long end of the curve has been getting a free ride on the flight to safety. But that plane has landed. Time for steepening.
    9 Aug 2012, 09:14 PM Reply Like
  •  
    El Erian, another guy I do not listen to.
    9 Aug 2012, 09:18 PM Reply Like
  •  
    You WANT me steep. You NEED me steep. You see "in places you don't talk about at dinner parties Muhammed..." AND YOU HAVE THAT LUXURY! We use words like PROFIT and SPREADSHEET...and you THROW IT AROUND LIKE IT'S SOME I PHONE 5. I would rather you just say STINKER and be on your way. EITHER WAY YOU BETTER BUY ME DINNER NEXT TIME BECAUSE YOU CAN'T PUT A PRICE ON MY SENSE OF HUMOR.
    9 Aug 2012, 09:29 PM Reply Like
  •  
    Steepening yield curve is better for the banks and the mREITs, but the curve is still relatively flat, with the difference btwn 2s and 10s at 1.4%
    9 Aug 2012, 10:12 PM Reply Like
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