UbaTuba

Bond Expert Wednesday Wrap

Mad Hedge . . . but if the Market drops, won't people dash back to Treasuries in the short term, making the short a loser during that time? What to do?


On Sep 09 05:24 PM Mad Hedge Fund Trader wrote:

> ghk. ) It’s time to take another look at the short US Treasury bond
> ETF (seekingalpha.com/symbo...). I first recommended this
> 200% leveraged bet that long dated bonds were going down big time
> in January at $35, catching a near double to $60 (click here for
> report) at www.madhedgefundtrader....
> We have now retrenched back to $45, and it’s time to reload the boat.
> The US government has now committed to $9.1 trillion in debt issuance
> over the next ten years. Foreign governments will need to borrow
> as much to fund their own bail out/stimulus programs. Did I mention
> inflation? There is absolutely no way the ten year can maintain a
> 3.40% yield in the face of this onslaught. It is clear that zero
> short rates are driving investors, many of whom will only buy Treasuries,
> into making terrible investments. This is what the awesome bid to
> cover ratio of 3.2X for today’s three year auction is telling you.
> The dollar clearly sees this and is hitting a new one year low. It’s
> just a matter of time before bond investors put on their bifocals
> and see the locomotive that is about to run over them.