For A Quick Buck : Running For The Safety Of Treasuries
People say Bill Gross is starting to talk strange, of Cracker Jacks and 7th innings, in his latest monthly.
“Why invest in financial or real assets if bond prices could only go down, and/or stock prices could no longer be pumped up via the artificial steroids of QE? ”
” in an unstable global economy that is increasingly difficult to stabilize, an investor should seek out the most stable of assets. At the extreme, that would be cash in the world’s most stable currency….. If unemployment and inflation rates can be at least closely guesstimated, then front-end yields become the most reliable bet in the ballpark…”
http://www.pimco.com/EN/Insights/Pages/Seventh-Inning-Stretch.aspx
And Marc Faber too.
“After all, “we had a big rally in gold already,” he said. “I think we will ease back a little bit.”
“I think the sentiment is incredibly bearish about Treasury bonds and Treasury notes,” he said. If the market drops, “people will again fear deflation, and they will move into 10-year Treasury notes.””
Analysts are starting to mention the cost of carry and as the EM crisis abates, there is every chance that USD reserves will be replenished.
Check out the market shorts.
I am looking for 10Y T-note to retrace 10-20 bp at least from here in the near term, to the 21 day moving average of 2.806% and potentially to 2.60% for the brave.
Investors can put on this trade by buying the IEF US (last done 99.20) and the UST US (last done 49.10) ETFs. They are both the 7-10Y US t-notes single and double leverage respectively.
Good luck !