US Treasury Market

  • Avatar

    Posted: 08 February 2009 10:20 PM

    Was hoping to start a little discussion on the bond market, primarily US treasuries 20-30 year maturity.  There is a lot of talk of a bear market developing on this maturity with 2 trillion in debt to be sold in 2009.  This increase in supply, coupled with China’s spending of less on US debt to finance their own stimulus plus Geithner’s comments on the Chinese manipulating their currency has already put a lot of pressure on these securities.  The Fed is only about 20% into a 500 billion MBS purchase campaign to keep 30 year mortgage rates down and keep overall long term funding cheap.  This week there is a 67 billion new debt auction with 14 billion in 30 year maturities.  There is talk the Fed will need to step in to put a floor on demand and keep rates from skyrocketing.  The question then is at some point this market will see a “pop” and the start of a bear market but can the Fed hold it off for 6 months if not longer to facilitate lower rates.  If they can then this bear market should be even more fierce when in fact it hits.  The other question I am less knowledgeable about is the best way to short this market.  There is the Lehman TBT 30 year ultra short but was curious as to any other advice on how to short this market? 

    Looking forward to a healthy discussion on the subject because there is a chance for a “safe” way to recoup a lot of aapl losses and more.

    Tony

    Signature

    NOBAMA / Carter 2012 - “Yes we can - we just figured out a way - it’s called the American deem”