Exactly, so basically all the people who bought the 10 yr at 1.85 the other day are all in the money now bc it's at 1.65 now..this area is crucial for ARR because ARR just issued about 100 million shares and bought bonds all priced in and around this area basically the 123-127-128 areas on the TLT..for ARR to profit from the recent SPO the TLT needs to go higher than those areas..
I kind of get it. ARR owns bonds. When the current yield on new ten year bonds drops, that increases the value of bonds held by ARR because, why would you buy the lower yield bond when you can buy a higher yield bond from ARR?
Also, this is only true right now because the fed has the short term rate so low.. i.e. at 0-.25 percent..in normal times the short term rates would be moving along with long term rates and lower yields wouldn't help ARR so much, but in these times we are in where the short term yield is basically fixed by the fed this means ARR can prosper because it can still maintain a decent spread and get some capital appreciation from increases in bond prices