Amazing. Where is the floor? I'm glad I sold my position.
The 10 year is going to 1.5% How much will TBT be if it happens?
I don't know but wake me up when it gets there.
U N F BLV
I've heard chatter about a 1.25% yield on the 10 year. TBT is headed at lower imho, until the Euro blows up and the pigs leave. Who in their right mind would by sovereign debt of a pig nation and risk the taking a near 50% haircut on the principal amount?
The time is just not right for TBT but when it is, I have a war chest of cash set aside to plow into it.
It's based on a derivative. It can go to zero. Below zero? Don't know. Call and ask the ETF company about your max liability from holding this thing. JPM has shown us that losses can be substantial in derivatives.
Interesting article on why TBT is one of the few ETFs that performs well over the long term relative to what it is tracking. It dispels the notion of "decay over the long run with the main reason being the low volatility of Treasuries.
There was some interesting commentary on the IMF "bazooka" put together a few weeks ago: if the IMF is forced to fire that bazooka, then central banks may be forced into selling their US holdings. So, if Europe is actually going over a cliff, then people may not be properly accounting for this risk.
Is this a case of too many people taking one side of the trade? I think so. We're at 60 year lows right now. Unless you believe we're entering a long period of deflation, then consider this temporary. (aside: see today's TIPS auction)
Personally, I'm willing to average down over the next couple months and then wait this one out.
I bought today at 1.72% on the 10-year. Couldn't miss because it couldn't go any lower. That is until it went down 1.70%. Amazing is the right word.
I'll hold short time to make a little profit or long time to make a big one. The 10Y can't stay at 1.70% long, it's cutting into the banks' margins.
The Japanese 10 year is 0.85 -- be careful in thinking this can't go lower. Not the same situation as in Japan, but markets don't always act rationally. It could stay here or lower for years for no reason other than because it can.