Thursday, February 18, 2010

TBT long, expect yields to go up.


 We mentioned a few weeks back ---buying TBT "long", it is really a bearish play though.

TBT is

TBT [NYSE]
UltraShort 20+ Year Treasury ProShares
Financial - Exchange Traded Fund - USA  


 Gov will need to, in desperation, pay higher rates to keep refinancing it's debt.

If someone gave $50,000 or 20 Year Treasuries, but you could not sell them for 20 years,
or
$50,000 in Gold --but you couldn't sell that for 20 years, which would you take.

Back to a trading level--

There is an alternate theory though, flight to safety of USD, and in particular Treasury Bonds, could jack up the price of bonds, which is exactly the same as saying decreasing the yield.

Those are directly and mathetically related.

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Insightful and Useful Comment!