Treasuries: Get Out Now (?)

[oddlots]

I've been tempted over the past 4 months to buy a double inverse short fund on the 30 year T bond. Resisted because the bet always seemed a little one-dimensional. But the action over the last week seems pretty decisive. And then there's this headline:

http://online.barrons.com/article/SB...67.html?page=2

[Jim Nickerson]

Re: Treasuries: Get Out Now (?)

I've been tempted over the past 4 months to buy a double inverse short fund on the 30 year T bond. Resisted because the bet always seemed a little one-dimensional. But the action over the last week seems pretty decisive. And then there's this headline:

http://online.barrons.com/article/SB...67.html?page=2

What do you mean "one dimensional?" TBT move inversely to the Lehman 20+ Long Bond Index according to http://www.etfconnect.com/select/fun...sp?MFID=185783

So TBT, if that is what you were referencing, is not just based on the price action of the 30-year US Bond. You can look at TLT at same link above and see a listing of the bonds in that ETF, I assume TBT works inversely to the behavior of that group. There is also a shorter term inverse ETF that is inverse 7-10 year bonds. PST http://www.proshares.com/funds?products=98616&fundType=

US longer notes and bonds are due for some sort of a correction in here and perhaps that is underway. Whether or not any pullback in bonds continues and it evolves that their recent highs were "the top" remains to be seen.

Personally, I have a position in TBT, though I have doubts as to whether I have bought it near a bottom in its price, top in bond prices, and will hold it until I die making money up til that point.

I don't think all the deflation is over and were that to be correct, it may follow that bonds have not really reached what might turn out to be their secular highs. I am not any good with macroeconomics or microencomics so don't get wound up on my opinion--if you should be so naive as that being a possibility.

[metalman]

Re: Treasuries: Get Out Now (?)

What do you mean "one dimensional?" TBT move inversely to the Lehman 20+ Long Bond Index according to http://www.etfconnect.com/select/fun...sp?MFID=185783

So TBT, if that is what you were referencing, is not just based on the price action of the 30-year US Bond. You can look at TLT at same link above and see a listing of the bonds in that ETF, I assume TBT works inversely to the behavior of that group. There is also a shorter term inverse ETF that is inverse 7-10 year bonds. PST http://www.proshares.com/funds?products=98616&fundType=

US longer notes and bonds are due for some sort of a correction in here and perhaps that is underway. Whether or not any pullback in bonds continues and it evolves that their recent highs were "the top" remains to be seen.

Personally, I have a position in TBT, though I have doubts as to whether I have bought it near a bottom in its price, top in bond prices, and will hold it until I die making money up til that point.

I don't think all the deflation is over and were that to be correct, it may follow that bonds have not really reached what might turn out to be their secular highs. I am not any good with macroeconomics or microencomics so don't get wound up on my opinion--if you should be so naive as that being a possibility.

i've been dying for a chance to be short tbills since the falkland islands were invaded by argentina. but i only learned about the fire econ in 2007. am i fucked?

[D-Mack]

Re: Treasuries: Get Out Now (?)

I saw something on it, but I was puzzled by this

Barron's calls Treasury bonds today's biggest bubble

...

Barron's also writes that better value now exists in other segments of the bond market, "including municipals, corporate bonds, convertible securities, some mortgage securities and preferred stock."

[Willette]

Re: Treasuries: Get Out Now (?)

I've been tempted over the past 4 months to buy a double inverse short fund on the 30 year T bond. Resisted because the bet always seemed a little one-dimensional. But the action over the last week seems pretty decisive.

It's good you didn't buy, because it was going the wrong way. I bought some TBT last week when it looked like it was about to turn up. But we have to wonder if it won't just get in a range at these levels and go not much of anywhere for awhile. In my way of thinking, the regime of falling interest rates has to reverse before bond prices can really tank. But monetary authorities around the world appear to be working overtime on keeping interest rates low and competitive devaluation of their currencies. Trust in government certainly dies a lot harder than I expected.

So, what factors are going to bring on the rising interest rates that so many have predicted? So far, only bad risks are paying higher rates.

[raja]

Re: Treasuries: Get Out Now (?)

So, what factors are going to bring on the rising interest rates that so many have predicted? So far, only bad risks are paying higher rates.

Treasuries won't turn around until there is something better to invest in . . . .

-- Stocks down, and probably going lower.

-- Gold dropped from 1024 to 750. Even though it's up to 850 now, this is not exactly beckoning.

-- Foreign stuff . . . they're as bad off as we are.

-- Private investment funds . . . Madoff

-- Other bonds . . . California would like to sell you some.

-- Commodities . . . been there, done that.

I saw on ABC News the other night, 2000 to 3000 shopping centers and malls are expected to close in 2009. That alone suggests things aren't going to turn around for awhile.
In my opinion, if you short Treasuries, you'll have a long wait . . . .

But what do I know . . . .
Two weeks ago I bought SRS at 139 and it's since plummeted to 50 :eek:

[oddlots]

Re: Treasuries: Get Out Now (?)

What do you mean "one dimensional?" TBT move inversely to the Lehman 20+ Long Bond Index according to http://www.etfconnect.com/select/fun...sp?MFID=185783

So TBT, if that is what you were referencing, is not just based on the price action of the 30-year US Bond. You can look at TLT at same link above and see a listing of the bonds in that ETF, I assume TBT works inversely to the behavior of that group. There is also a shorter term inverse ETF that is inverse 7-10 year bonds. PST http://www.proshares.com/funds?products=98616&fundType=

US longer notes and bonds are due for some sort of a correction in here and perhaps that is underway. Whether or not any pullback in bonds continues and it evolves that their recent highs were "the top" remains to be seen.

Personally, I have a position in TBT, though I have doubts as to whether I have bought it near a bottom in its price, top in bond prices, and will hold it until I die making money up til that point.

I don't think all the deflation is over and were that to be correct, it may follow that bonds have not really reached what might turn out to be their secular highs. I am not any good with macroeconomics or microencomics so don't get wound up on my opinion--if you should be so naive as that being a possibility.

Hey Jim,

By one-dimensional I simply meant that people that assume that rates must rise also seem to assume that the market is dominated by rational agents as opposed to political agents (for instance, foreign CBs with a mercantalist agenda working with the Fed). It just seems to me that many commentators with an Austrian bent are assuming what they're actually arguing for: free markets. The drop at the long end of the curve that occurred a couple of weeks ago and was attributed to Bernanke's reminding the market that he had suggested the Fed could begin buying further out on the curve would be a case in point.

I guess to get really excited about going short treasuries I'd have to have a convincing argument as to why these political agents have lost the ability to dominate moves in these markets in the very short term.

[Jim Nickerson]

Re: Treasuries: Get Out Now (?)

Treasuries won't turn around until there is something better to invest in . . . .

-- Stocks down, and probably going lower.

-- Gold dropped from 1024 to 750. Even though it's up to 850 now, this is not exactly beckoning.

-- Foreign stuff . . . they're as bad off as we are.

-- Private investment funds . . . Madoff

-- Other bonds . . . California would like to sell you some.

-- Commodities . . . been there, done that.

I saw on ABC News the other night, 2000 to 3000 shopping centers and malls are expected to close in 2009. That alone suggests things aren't going to turn around for awhile.
In my opinion, if you short Treasuries, you'll have a long wait . . . .

But what do I know . . . .
Two weeks ago I bought SRS at 139 and it's since plummeted to 50 :eek:

If you thought it was a good buy at 139, and based on the prospects of CRE tanking, assuming that comes to past, then SRS is a helluva buy at 55 I beleive. Bot a bit myself yesterday.

[Willette]

CHART Worth 1,000 words

[sergbrn]

Re: Treasuries: Get Out Now (?)

I'm also long TBT - got in at 52-58.
However with fed able to buy US debt in a big way (2-3 T) using it's balance, it's hard to say where the bonds are going. The problem noone knows is if they'll be able to balance inflation and US expences. I think they won't - we'll know in a matter of at least 18 months. Meanwhile top bond prices will be achieved in the first 4-5 months after Fed will start buying US debt madly.
Anyway 15 months story doesn't tell anything. Don't pray to charts.
Fed at will can buy all of US debt using it's balance with long term interest rates going to 0.
Sure in such extreme it will cause hyperinflation. Do they care? Who knows.
With such poor intellect they show lately they just as well be mistaken on output.

[Chris Coles]

Re: Treasuries: Get Out Now (?)

It has always been my understanding that people go skiing immediately after the new year and so nothing will happen now until at the earliest end January. Indeed, if they have the legs for it, they may not be back to their desks before end February. A problem left back at the "office" when on a nice powder snow piste; has no legs.... ;)

[charliebrown]

Re: Treasuries: Get Out Now (?)

I got burned too bought srs @ 78.00 a few weeks ago.
Now in the 40's ouch. Also bought tbt too early too bought in the 50's.
Its painful down here. I am waiting to see some more sustained weakness before I buy more TBT.

[we_are_toast]

Re: Treasuries: Get Out Now (?)

Something that has me a bit confused is the rise in TBT AND the dollar.

I thought the rise in the dollar and drop in TBT, from a couple of months ago, was due to dumping dollar assets and rushing to Tbills? Now we see a rise in TBT and the dollar. Isn't this indicating that someone is selling Tbills for dollars? Or maybe selling dollar denominated assets but not converting those dollars to Tbills? Could it mean that foreign governments are getting very worried of Tbills?

[Southernguy]

Re: Treasuries: Get Out Now (?)

Iīm long TBT, began too early, buy not worried. Continued buying on the down way.
The US economic policy is between a two arms clamp. One, they need to stimulate a declining, see todayīs employment figures, economy. On the other, they have twin large deficits.
In particular, if trade deficits goes on, and it shall, for quite a long time, they need the dollar to buy as much as possible.
So there is a limit on how many treasuries the Gov. can buy, thus monetizing debt.
And there is another factor, as China, and Japan, and others export less, in particular to USA they have less dollars to buy Tīs.
All in all, whatīs going down the drain is the USA standard of living, and, for quite a while the US economy. Shorting Tīs (eg by TBT) is like shorting an economy that is going to do very badly for a good while.
In respect to TBT, an enquiry by my investment bank officer drew the following answer:
[FONT='Calibri','sans-serif']
[/FONT]
[FONT='Calibri','sans-serif']Thank you for your email regarding ProShares.[/FONT]
[FONT='Calibri','sans-serif'] [/FONT]
[FONT='Calibri','sans-serif']Currently, ProShare Advisors, LLC does not disclose the counterparty names to the public.[/FONT]
[FONT='Calibri','sans-serif'] [/FONT]
[FONT='Calibri','sans-serif']ProShares takes a number of steps to protect the fund from counterparty default. These steps include, but are not limited to the following: 1) ProShares LLC uses only large institutional firms that have high credit ratings from Moody's, Standard and Poor, and Fitch; 2) ProShares LLC also monitors the obligations daily and net out our obligations on a periodic basis to mitigate credit risk.[/FONT]
[FONT='Calibri','sans-serif'] [/FONT]
[FONT='Calibri','sans-serif']Per the attached prospectus, a Fund will be subject to credit risk with respect to the amount it expects to receive from counterparties to financial instruments and repurchase agreements entered into by the Fund or held by special purpose or structured vehicles. If a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, the value of your investment in a Fund may decline. A Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding and a Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Funds typically enter into transactions with counterparties whose credit rating, at the time of the transaction, is investment grade, as determined by a nationally recognized statistical rating organization, or, if unrated, judged by ProShare Advisors to be of comparable quality.[/FONT]
[FONT='Calibri','sans-serif'] [/FONT]
[FONT='Calibri','sans-serif']Also, please note that an investment in a Fund is not a deposit of a bank, and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Funds are not guaranteed to achieve their investment objectives, and an investment in a Fund could lose money. No single Fund is a complete investment program. [/FONT]
[FONT='Calibri','sans-serif'] [/FONT]
[FONT='Calibri','sans-serif']Additional Fund risks are disclosed in the prospectus. [/FONT]
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[FONT='Calibri','sans-serif']If you have further questions, please call us at #1-866-776-5125 and one of our Registered Representatives will be able to assist you.[/FONT]
[FONT='Calibri','sans-serif'] [/FONT]
[FONT='Calibri','sans-serif']Sincerely,
xxxxxxxxxx
The question was in respect to the counterparty risk arising from holding tbt.
Itulipīs members informed comments are welcome.
[/FONT]

[oddlots]

Re: Treasuries: Get Out Now (?)

Good collection of articles regarding the Bond Bubble issue including Faber and Rogers...

http://pensionpulse.blogspot.com/200...-in-bonds.html

C/o Naked Capitalism