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The TBT For the Long Haul

|Includes: ProShares UltraShort 20+ Year Treasury ETF (TBT)

One of my core positions, the PowerShares Lehman 20 Year 200% short ETF (NYSEARCA:TBT), a bet that benefits from falling long Treasury prices, hit a new high for the year today at $54.50. Long time readers of this column got into it in December at $35. The ripple effects of last week’s US downgrade chatter is still feeding into prices, exacerbated by another huge slug of new issuance this week. Treasury futures got slammed, gapping down two points to 118 3/4, and are off a breathtaking 20% from the recent peak. I think the downgrade talk is premature, and the inflation rationale for this trade is still years off. The news about another North Korean nuclear test is just noise. But when a security is as accident prone as Treasury bonds, you never know which of the panoply of negative surprises is going to hit first. I think the bond bubble has popped, and that the TBT could eventually spike to $200.