Tuesday, 6 January 2009

TBT - The big trade in 2009?

I think the big trade in 2009 will be to go short treasuries massively.
Dr Marc Faber, quoted on Moneycontrol.com, 30/12/2008

Well, I've been here before, and my arguments remain the same: at some point, the Fed's attempts to refloat markets by debasing the dollar will succeed, and that long-term US interest rates will have to rise to compensate for resurgent inflation.

I'm very glad I exited this trade before, given the near parabolic rise in 20+ T-Bonds since late November. However, as of Friday, the 3dma of TLT (the iShares Lehman 20+ Year T-Bond ETF) has broken below the 13dma, so I'm going short of T-Bonds once more, through the purchase of the Proshares Ultrashort 20+ T-Bond ETF (TBT). I bought a stack of these today at $42.33 (about £28.42).

Note that this Ultrashort ETF is actually an inflation play, unlike the SDS or SRS which I have traded recently. I'm also being aggressive in ignoring my own rule about the 39dma, which still slopes upwards for TLT. Time will tell whether I am jumping the gun.

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