Global Economic Intersection
Advertisement
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
Global Economic Intersection
No Result
View All Result

10 Year Treasury Short Best Place to be Remainder of 2014

admin by admin
September 17, 2014
in Uncategorized
0
0
SHARES
3
VIEWS
Share on FacebookShare on Twitter

by EconMatters, EconMatters.com

Strategically Shorting Bonds

I have been shorting the 10 year Treasury strategically the last 6 months buying the oversold yield conditions right before the employment report ramp up in yields, it has been quite an effective trading strategy this year, and has contributed in part along with some oil and equity trades to being up over 30% versus the overall market returns for both bond and stock investors which we just approximate to the 10% range year to date depending upon exact portfolio mix.

Another Profitable Trade Well I am profitable on this latest move up in 10-year yields, and I expect yields to continue rising through the 10 and 30 year bond auctions later this week, and I expect a strong retail sales number on Friday, and with the all-important FOMC Quarterly Forecast Meeting next Wednesday, I expect yields to run up through this meeting on a slow grind higher.

Read More >>> The Bond Market Explained for Mohamed El-Erian

Stay Short Until Year End?

Therefore the question becomes where I close out the trade as I have December expiration 10-year futures contracts, and normally I would close out on a spike before, during or right after the FOMC Meeting. However, when I look around at the market landscape of assets to buy, sell or invest in for the remainder of the year, or in other words if I close out the position where do I go next? And there are just not a lot of appealing alternatives right now! I still view the 10-year Treasury short at least until year end as the best place to park money, as it is all about putting money to work in market places that offer real value, have a catalyst for future upside profit, and the risk reward profile makes sense, and the 10-year Treasury short just makes sense on all accounts.

Read More >>> Negative Real Rates Show Yield Trade in Bubble Territory

Value, Catalyst & Risk Reward Profile

First of all the economy is improving, but even if it just maintained the status quo growth of 2%; bond yields are too low given a 2% rate of inflation, and the Fed Funds Rate shouldn’t be at zero percent, that will have to change, and the Fed recognizes this mismatch, even if we only create 140k new jobs each month, that is still lowering the unemployment rate.

The catalyst is that the Fed is getting out of the bond buying business in October, and they are going to raise rates in 2015. The value proposition is that all bonds from Global European Bonds to US Treasuries are over-valued and mispriced, or in a bubble that the fundamentals cannot possibly sustain. As I said in a previous piece on European Bonds specifically, just park money short every single European Bond or a basket of these bonds, and over a 10 year period you are going to make a good some of money.

Read More >>> Inflation Pressures in Core Food Components

All these bond yields are mispriced compared to the risk profile over a 10 year duration period, and since writing that piece other investors who were short have realized a 15 basis point profit in yield appreciation for those same European overpriced bonds. Some of these European Bond Yields are going to double sometime over the next 10 years, they just are poorly aligned with the fundamentals of the balance sheets of these government’s spending patterns!

All Bonds Are Mispriced and unlike Stocks Don’t have ‘Multiple Expansion’ Qualities

Accordingly the argument that relative to European bonds…..blah, blah, blah….is a complete non-starter for me because those bonds are overvalued by factors of 3 and 4 times, half those peripheral European countries are going to need to be bailed out like Greece in five years’ time. Have you seen their spiraling out of control Debt-to-GDP Ratios of just the last two years? They are headed in the wrong direction without the robust tax generating capabilities like the United States has with an increased budget margin for error luxury due to being the Global leader in many industries from technology, healthcare, energy, agriculture, resources, Research, Education and entertainment.

Apple is a Short at $120

But what other assets represent good setups, I like an Apple short, but I think they are going to have just a blockbuster 4th quarter, and probably two really strong quarters of growth in earnings. After the ‘Big Screen Adoption Cycle’ then I want to come in and short Apple, it is just too early because unlike the last time Apple was at these same lofty price levels, there are fewer shares in the market because of Apple buybacks, and Samsung no longer has a big advantage over Apple in having the best Big Screen Phone.

But if Apple does get near $120 that is when I will start evaluating a short in the stock, but until then I would rather stay short the 10-year Bond. Unless Apple is going to start making electric cars, they are eventually going to run out of new product categories, and become a commoditized supplier of devices with a much lower stock price and market cap….timing is everything in markets. Apple is a short, just not quite yet for the best setup! The Bond Market doesn’t have a Christmas Buying Season to fade as a short does in Apple where every teenager around the world wants the new cool Apple Big Screen Smartphone and 4th quarter earnings are shockingly good!

Gold is a ‘Meh’ Market

What about the Gold market, the current price just is sort of ‘meh’ for me from a valuation standpoint, I don’t want to really buy or sell Gold at these levels. What’s the catalyst for a Gold Short, a sooner than expected rate hike, I would rather be short Bonds! Is Gold such a bargain right here from the Long Side in a rate hiking environment, not really….if inflation takes off as a potential catalyst for Gold to offset the stronger dollar in a rising rate environment, I have two ways to win by being short Bonds versus Gold!

Equities Always Have Some Form of Bid

What about buying or selling equities, I really don’t want to own equities the valuations are too stretched, and although shorts are appealing, only really after new tops have been established, and shorting makes sense as traders take profits after buying the last dip.

There is still an abundance of liquidity even with the BOE & Fed tightening with a dire need of some place to go, and equities seem like they will get the benefit of the doubt on any selloffs over bonds by investors which have to fade not only being in a bubble, but one that is facing interest rate hikes or a tightening Fed!

So what I am saying here is that equities can stay ‘over-valued’ longer than bonds, they can hold in there to some degree during rate hikes, whereas bonds are absolutely going to get slaughtered during the initial adjustment phase of first rate hikes.

Labor Day Selling of Global Bonds

Again the best place to be is short bonds, and the front of the curve has already gone up considerably, whereas the 10-year short represents the best value from a “yet to be priced-in rate hike reality’ perspective as a bunch of investors were trying to hide out in this area for as long as possible because of so much liquidity they couldn’t help but gorge themselves on chasing yield up until the last moment which seemed to correspond to the closing out of August as the 10-Year has added roughly 16 basis points in the month of September as traders realized they were way off sides going into the back end of the year with a multitude of Fed rate decisions, strong GDP numbers, and a buy the rumor, sell the news ECB QE Decision on European Bond Purchases!

Oil in No Man’s Land

Everything depends on price, but right now when I look around at bargains in financial markets I don’t really see many investment alternatives out there, now if Oil dropped further maybe it could become a bargain 10% lower. However not here I think it is going lower, and it was appealing to short at $107 a barrel for the WTI contract, but not that appealing here at $92 a barrel.

FOMC Press Conference

Thus we will see what Janet Yellen says next Wednesday, and where 10-Year yields are after the FOMC Forecast Press Conference. I normally like to take profits on trades, but I really cannot think of a good reason either in better investment alternatives, or the 10-Year yield no longer being mispriced relative to economic conditions that would necessitate me not staying short 10-Year Futures until year end, i.e., the third week in December 2014.

10-Year Yield 4% Plus in 2015

Shoot I might just roll this trade over into 2015 10-Year Futures from the short side if I still evaluate that this yield is mispriced substantially, and I think this is what captured David Tepper’s Trading Sensibility as well. The trade just makes sense on so many levels, and from a risk reward standpoint with the ability to rollover to catch the meat of the move up in yields in a rate hiking environment, it is the best value on the street as the 10-Year heads towards 4% in 2015.

Previous Post

Investing.com Technical Summary 16 September 2014

Next Post

Infographic of the Day: The Indian Film Industry

Related Posts

What Are BRC-30 Tokens?
Econ Intersect News

What Are BRC-30 Tokens?

by John Wanguba
June 2, 2023
XRP Explosive Boom Results In Record-Breaking Address Activity
Economics

XRP’s Explosive Boom Results In Record-Breaking Address Activity

by John Wanguba
June 1, 2023
What To Consider When Evaluating Low-Code And No-Code Platforms
Business

What To Consider When Evaluating Low-Code And No-Code Platforms

by John Wanguba
June 1, 2023
Crypto Bear Phase Gone, ‘Explosive’ Bull Market Imminent – Veteran Investor
Economics

Crypto Bear Phase Gone, ‘Explosive’ Bull Market Imminent – Veteran Investor

by John Wanguba
June 1, 2023
Only 2 Exchanges Registered In Hong Kong As Crypto Ban Is Removed
Economics

Only 2 Exchanges Registered In Hong Kong As Crypto Ban Is Removed

by John Wanguba
May 31, 2023
Next Post

Infographic of the Day: The Indian Film Industry

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Browse by Category

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Browse by Tags

adoption altcoins bank banking banks Binance Bitcoin Bitcoin adoption Bitcoin market blockchain BTC business China crypto crypto adoption cryptocurrency crypto exchange crypto market crypto regulation decentralized finance DeFi Elon Musk ETH Ethereum Europe Federal Reserve finance FTX inflation investment market analysis Metaverse NFT nonfungible tokens oil market price analysis recession regulation Russia stock market technology Tesla the UK the US Twitter

Archives

  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • August 2010
  • August 2009

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized
Global Economic Intersection

After nearly 11 years of 24/7/365 operation, Global Economic Intersection co-founders Steven Hansen and John Lounsbury are retiring. The new owner, a global media company in London, is in the process of completing the set-up of Global Economic Intersection files in their system and publishing platform. The official website ownership transfer took place on 24 August.

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Recent Posts

  • What Are BRC-30 Tokens?
  • XRP’s Explosive Boom Results In Record-Breaking Address Activity
  • What To Consider When Evaluating Low-Code And No-Code Platforms

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

No Result
View All Result
  • Home
  • Contact Us
  • Bitcoin Robot
    • Bitcoin Profit
    • Bitcoin Code
    • Quantum AI
    • eKrona Cryptocurrency
    • Bitcoin Up
    • Bitcoin Prime
    • Yuan Pay Group
    • Immediate Profit
    • BitIQ
    • Bitcoin Loophole
    • Crypto Boom
    • Bitcoin Era
    • Bitcoin Treasure
    • Bitcoin Lucro
    • Bitcoin System
    • Oil Profit
    • The News Spy
    • British Bitcoin Profit
    • Bitcoin Trader
  • Bitcoin Reddit

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

en English
ar Arabicbg Bulgarianda Danishnl Dutchen Englishfi Finnishfr Frenchde Germanel Greekit Italianja Japaneselv Latvianno Norwegianpl Polishpt Portuguesero Romanianes Spanishsv Swedish