Just interested to see if there is anyone paying attention to this product. My belief is that debt cost will rise for Japan in the near future - just not sure this product can catch that rise and if there is enough volume to actively trade...
Logic tells me that the Japanese bonds are overvalued given its risk profile. However IU have lost on the TBT trade two or three times over the past several years. Each time small losses; one when it was in the mid 40s!!!.
The old saying about "you can go bust waiting for a market to act rationally" was certainly true about TBT. So many writers and talking heads were certainly that yields would go up. It seems amusing looking back.
Anyway I will nibble at this trade, maybe just shorting the Japanese bonds in the futures market.
Anyway good luck to shorts, longs, lurkers, anarchists et al
ZeroHedge, the web site, had a very long article about the options that Greece has in its negotiations with its creditors.
The article argues that Greece may cram down new terms on lenders. How does this apply to JGBD? Well the article says that "an adverse outcome from the 11th hour discussions between the IIF, the ad hoc creditors, Greece, and the Troika, would have monumental consequences for the entire bond market in general."
This may be the catalyst.
This has been the widow maker trade. But at sometime in the future it works and works big. I have a lot.
Check out these videos and posts that support the position.
Pritchard has been calling for problems in Japan since the end of 2009. Someday he will be right.
Most ETN/ETF's are quirky in the sense they are buying certain futures that attempt to "mimic" the rise or fall of bonds...some track very well (TBT) others not so well (OIL)...but in this case JGB are not a massive market like US Treasuries because 95% are held by the Japanese themselves. So, it maybe harder to track. Plus, the ETN has light volume which makes it harder for the fund to trade in and out of products.
Again, I do not know about this one and I am going to wait and see (have a little so it pops up on my radar daily) but I do think Japan is nearing that point where they are going to have to go outside Japan for funding...its been a loser's bet for a long time but at some point the demographics are just not there for Japan but it could be March of 2012 of in five years...
However, they announced today they are offering gold to any investors who buy the reconstruction bonds...hmmm