contraxism

The Market Is Telling Us Something

There may be considerable upside yet to play out in US Treasuries. The unwinding of US carry-trade is reason enough alone to hold treasuries. At the very least I would wait for the unwinding process of the CDSs market to play out. As long as derivatives are at risk to counter-party defaults, the unwinding of leverage will put upward pressure on the USD. Forget about the yield until the unwinding of borrowed USD subsides. What if the next government cracks down on speculators of derivatives and commodities? There is too much uncertainty to forecast much more than a day.