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There has been a feeding frenzy by journalists on the subject of trying to pick a top in bonds. All the wrong analysis. Bonds will fall when the Fed decides it wants rates back up. Not sooner.
At the risk of ruining my comic relief status, I agree with you. The Fed has pretty much promised to do what you say. There's no way they will let the gap between the Fed funds rate and the rate paid on Treasuries get too wide. In fact, shorting Treasuries, particularly long-dated ones, at this point in time just seems way too obvious (interest rates at all time lows or non-existent), which should make someone think twice before doing it long-term or sinking too much of their portfolio into what I'd view as a questionable, if not dangerous trade.
2 comments:
At the risk of ruining my comic relief status, I agree with you. The Fed has pretty much promised to do what you say. There's no way they will let the gap between the Fed funds rate and the rate paid on Treasuries get too wide. In fact, shorting Treasuries, particularly long-dated ones, at this point in time just seems way too obvious (interest rates at all time lows or non-existent), which should make someone think twice before doing it long-term or sinking too much of their portfolio into what I'd view as a questionable, if not dangerous trade.
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