Treasury Bonds Yield Is Quarter Point From Record Low & Shorting Bonds Is Still The Trade Of The Decade

[SEE3772]

Treasury Bonds Yield Is Quarter Point From Record Low

Treasury yields were within a quarter percentage point of the record low on speculation reports this week will show the U.S. labor market is deteriorating, raising the odds the Federal Reserve will increase its bond purchases.

http://mobile.bloomberg.com/news/201...ecord-low.html

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Shorting Bonds Is Still The Trade Of The Decade

DOUG KASS: Shorting Bonds Is Still The Trade Of The Decade

Treasury yields are near all-time lows, and the Federal Reserve continues to reiterate its commitment to keep rates low for a long time.

However, Doug Kass of Seabreeze Partners remains convinced that rates will soon rise, which means bond prices will fall.

"I maintain the view that shorting the U.S. fixed-income market is still the trade of the decade," writes Kass in a new post for RealMoneyPro.

"And, despite the known headwinds of slowing domestic and non-U.S. economic growth and the threat of the fiscal cliff, I now believe that the potential exists for bonds to experience pricing pressure (and an increase in bond yields) over the near term. "

He provides eight reasons for his ongoing bearish call on Treasuries. Here are three big ones:

QE3 is designed to target mortgages, not Treasuries.
If the Fed doesn't extend Operation Twist at the end of the year, there will be extra slack in the Treasury market.
China is slowing and is less likely to be a big buyer of U.S. Treasuries.
This is a position he discussed at great length in a big presentation at May's Value Investing Conference in Omaha, Nebraska. According to Market Folly, Kass identified seven key factors that could be "disruptive to the bond market": 1) "the flight to safety premium erodes;" 2) "a muddle through economy might gain speed in the years ahead as domestic growth moves toward potential;" 3) "Federal Reserve policy is likely on hold—natural price discovery in fixed income;" 4) "inflation on the ascent;" 5) "housing is embarking on a durable multi-year recovery;" 6) "stocks versus bonds—the approaching reallocation trade;" and 7) "U.S. fiscal imbalances are not being addressed."

In a series of charts and data tables, he demonstrates how these factors create a huge opportunity for investors willing to go against the grain.

http://www.businessinsider.com/doug-...e-2012-10?op=1

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TREASURIES-Prices plunge as Fed pushes buyers out of bonds

[TexTushHog]

The trend is your friend. Lot's of people have had a great idea on things to short and have gone broke before the market finally turned in their favor. Where do you see assets going that are currently in U.S. bonds? If anything, if things get dicey, I see higher demand for quality, not less.

[Submodo]

If they are so smart, have all this figured out, then why did they form Seabreeze partners? Can't they just short the bond market and rake in the profits? Why do they need clients?

[SEE3772]

Originally Posted by TexTushHog

The trend is your friend. Lot's of people have had a great idea on things to short and have gone broke before the market finally turned in their favor. Where do you see assets going that are currently in U.S. bonds? If anything, if things get dicey, I see higher demand for quality, not less.

You may see a higher demand for (quality?)... but below are the facts.

America, 103% debt to GDP and growing.

Quantitative Easing - Open Ended
Zero Interest Rate Policy
Operation Twist

This affects the Interbank interest rates.
A liquidity trap is what the Federal Reserve is caught up in.


The Federal Reserve Is Systematically Destroying The U.S. Bond Market

US Debt Soars To $16,159,487,013,300.35, +$93 Billion

Federal Reserve Bank of New York: Staff Report No. 574 October 2012 - "The Forward Guidance Puzzle" Dynamic Stochastic General Equilibrium Model Predicts Explosive Inflation - The Outcome Is Hyperinflation

Federal Reserve Z1 Flow of Funds Accounts of the United States - Second Quarter 2012 Report

The U.S. Fiscal Gap Is Now $222 Trillion. Last Year, It Was $211 Trillion

Philadelphia Federal Reserve President Charles Plosser Opposed To Risky QE3 Because It Won't Work

Deutsche Bank Report - Gold: Adjusting For Zero

[TexTushHog]

So where are people going to put that money instead? I don't see a flow of funds out of bonds until there are attractive returns elsewhere. If you believe the other post you put up about stocks collapsing, you'd be a fool to short bonds. Money will flee stocks and rush to safety if equities crash.

[I B Hankering]

Originally Posted by TexTushHog

So where are people going to put that money instead? I don't see a flow of funds out of bonds until there are attractive returns elsewhere. If you believe the other post you put up about stocks collapsing, you'd be a fool to short bonds. Money will flee stocks and rush to safety if equities crash.

Don't worry, TTH. Bernanke's going to devalue the dollar to such a degree you'll need a wheelbarrow full of dollars to buy a loaf of bread -- food and fuel will be where everyone "invests" all of their money.

[Yssup Rider]

You're a fucking idiot

[SEE3772]

I have already posted the answers to your questions on this forum.

Watch and listen to the videos.
Just a FEW more.
Hope this helps...

http://video.cnbc.com/gallery/?video=3000120365&play=1

http://www.cnbc.com/id/46805820/Long..._to_Burst_Ross

And this...
Bill Gross Sells $30 Billion In Treasurys In August As Total Return Fund Cuts Government Exposure By Over A Third



While others were buying TSYs in the month of August on hopes of frontrunning the central printer, and expectations that Bernanke's NEW QE announcement will lead to even more flattening in the curve (even though as we explained there is only $650Bn in free 10-30 year private sector inventory available in the entire market), Bill Gross, via PIMCO's flagship Total Return Fund, was busy selling. So busy in fact that over $30 Billion in US paper was dumped to unwitting investors, resulting in the move wider by the 10 Year paper which at auction earlier today priced at a multi-month high yield. As a result at the end of August, PIMCO's total Treasury exposure was just 21% of total AUM, the lowest since August 2011. And what did Pimco do with the proceeds? Nothing - it merely satisfied its margin cash position, which plunged from -18% to -6%.

Why did PIMCO sell? Fears of inflation, as can be seen in the attached chart of holdings duration, which dropped across the board, sending the TRF effective duration to the lowest it has been since May 2011, ot 4.21 years.



...and this

The Best And Worst Performers In Q3 And September

[TexTushHog]

So you think folks are just going to hold cash? I don't buy it. I know about Gross's pessimism, but I think he's an outlier, although one who has certainly been right before.

[I B Hankering]

Originally Posted by Yssup Rider

More dribble-shit blathering from Assup.

.

[I B Hankering]

Originally Posted by TexTushHog

So you think folks are just going to hold cash? I don't buy it. I know about Gross's pessimism, but I think he's an outlier, although one who has certainly been right before.

You're suggesting the stock market will provide a guaranteed return!?! . . . and you have the nerve to claim Romney is out of touch!?!

[SEE3772]

Originally Posted by TexTushHog

So you think folks are just going to hold cash? I don't buy it. I know about Gross's pessimism, but I think he's an outlier, although one who has certainly been right before.

Some investors are holding on to cash waiting on the markets to bottom.
While at the same time purchasing real assets with no counter party risk.

The FED is the main player in the treasury market.
http://www.newyorkfed.org/markets/so...choldings.html