See the article ref'd below. If FED holds these interest rates for years as suggested, TBT is dead for some time. Sure it may have a few days that it gains a couple bucks, will then decay for months. ===============================
Fed May Buy Bonds, Hold Rates Till 2015 to Avoid Recession, Goldman Says By Wes Goodman and Garfield Reynolds - Oct 11, 2010 7:45 PM CT
Trying to force the price of TBT down with simplistic arguments isn't going to hack it. First, the Fed can only really affect the short end of the yield curve and it is now out of ammunition. With respect to long rates, global financial markets have been slowly diversifying away from the dollar for several years. The socalled "flight to quality" has temporarily masked the deteriorating position of the U.S. currcenyc. With historically low yields, this deterioration has been accelerating in recent months. Finally, the reserve currency status of the United States is increasingly in trouble. Bottom line: at this point, QE II is likely to be tantamount to pushing on a wet noodle.
All of this points to higher rates. But, if you want to fight history, go for it.
TBT will be in tight trade range between $29.75 and $33.75 before QE2. This is speculators sell and buy on both sides.
Then after the Fed begins QE2 in late November, TBT will be straight down for 9 to 12 months. If foreigners shall sell their Treasuries, they will wait for about 9 months. I think 3 months is long enough for them to dump their holdings if necessary. They will watch and see first.
I know you mean well but you are playing into their "shell game". Goldman Sachs is in bed with the federal gov for their mutual benefit. How many gov officials have also served on the board of GS? Why did the gov bail out GS, Bear Sterns and the rest of that cozy bunch?? Truth is, for every article you post saying QE2 is coming and will rule the day, I can find others to the contrary. Please see below: http://www.bloomberg.com/news/2010-10-11/dollar-trades-near-15-year-low-against-yen-before-federal-reserve-minutes.html The fact that so many reputable economists are adamantly proclaiming these seemingly 180 degree opposite views confirms nothing more than we are in unprecedented times. The Fed, with it's veiled threat of a massive QE2 is bluffing hoping not to have to roll these very dangerous dice. It's like they are playing poker with the world and betting "all in" with lousy hand. They are backed into a corner and hoping everyone else folds. My brother, we are in dangerous economic times. Here is a site I'd like everyone to keep in mind: http://www.usdebtclock.org/ That is the real time sum of the national debt of the United States. Goes up about $1m every 29 seconds and does not even include the medicare, medicaid and SS liabilities owed to our aging baby boomers because the politicians decided to sweep that humongous amount under the rug so as not to scare the general public. (but you can see that total of approx $110 trillion down at the bottom of the site. WHo knows how this will play out, just know that the your beloved gov will do & say anything, (with the help of their Wall St. cohorts) to keep this charade propped up until they can figure a way out of this pending dollar collapse - which at this time, they haven't a clue. My guess, at some point in the not too distant future, the doo-doo hits the fan. TBT soars