Seeking Alpha

Deutsche's LaVorgna sees "swift and violent" rise in rates

  • Joe LaVorgna's forecasting has been less than on point for awhile, but every dart thrower hits the bullseye once in a while, and the Deutshce Bank chief U.S economist sees a sharp rebound in the economy this quarter.
  • Pointing to examples from June-July 2003 and May-June 2013, LaVorgna says the rise in rates will be dramatic and fast. "Each instance saw an unexpected and substantial sell-off in interest rates that was the direct result of a shift in investors’ expectations of the path of monetary policy."
  • The catalyst could be the economic data, or maybe the Fed itself wants to suck some of the froth out of the market by taking a hawkish stance, says LaVorgna.
  • "More importantly, we believe that it will be obvious to the FOMC sometime over the next few months, that policymakers’ soft targets on unemployment and inflation will be met much sooner than what was built into the last publicly available forecast in March."
  • The 10-year yield is lower by four basis points on the session to 2.50%. TLT +0.7%
  • ETFs: TBT, TLT, TMV, SHY, TBF, EDV, TTT, TMF, ZROZ, SBND, TLH, DLBS, VGLT, BIL, UBT, SHV, VGSH, TLO, SCHO, TENZ, LBND, SST, TYBS, TUZ, DTUL, DTUS, DLBL
From other sites
Comments (6)
  • Larusso
    , contributor
    Comment (1) | Send Message
     
    So wrong for so long. If rates go up, housing collapses again and recession is then in the cards so bonds rally. He missed this years bond rally and now calls a bottom? No thanks.
    15 May 2014, 03:43 PM Reply Like
  • Mrnomad
    , contributor
    Comments (358) | Send Message
     
    Nice fellow, Joe. His forecast and my OUIJA BOARD seem to work equally well.
    15 May 2014, 04:28 PM Reply Like
  • andrewtoney
    , contributor
    Comments (100) | Send Message
     
    7-month low for TNX,TLT breaking higher and this character babbles of dramatic rate hikes;has he no shame?
    15 May 2014, 05:50 PM Reply Like
  • johnbartles
    , contributor
    Comments (4) | Send Message
     
    Actually seems like a pretty safe call. All the 10 yr has to do is to move to year end 2013 and the result is a 4.00% loss and could be worse if it prices drops for a yield of 3.25%-3.40% which could result in a 6+% loss by year end from current levels.
    16 May 2014, 12:39 PM Reply Like
  • SanDiegoNonSurfer
    , contributor
    Comments (3627) | Send Message
     
    A rapid increase in Treasury yield would make me happy but I don't think we're going to see it.
    19 May 2014, 11:26 AM Reply Like
  • Gigem77
    , contributor
    Comments (1443) | Send Message
     
    http://cnb.cx/RQmGTp Gundlach looks at the large short position in bonds. .. another perspective. Also look at the TIC data for Feb.
    19 May 2014, 10:03 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs