Comments
-
aggreat commentary. Idea ...... Do you have any shorts in the financial space to take advantage of mortgages going South in the USA and/or Canada ?
-
MSThanks for this. You often reference rate of change as an important indicator. Does the rate at which oil dropped mean anything to you? If so why? thanks
-
MDCan you give some alternative instruments with which to play this if one doesn't have access to the futures market?
-
ASWhy TLT and not IEF?
-
PMRookie question on 2021 Eurodollar trade construction with the previous long vertical option trade: similar to 2018? (long DEC2021 98.75 calls / short DEC2021 99.25 calls)
-
NOThis is one of that unusual category of research to download, print out, read, re-read and don't forget!
-
DHIt appears that the Eurodollar and Treasury Note Futures contracts require minimum capital of US$200K+ for each contract. Is this correct or am I looking at the wrong thing? If so, are there lower capital requirements alternatives so that we can start small and then build on the position as the momentum builds? The comments below reference iShares ETFs so that appears to be one alternative?
-
CSGOOG $1004
-
LMRead yesterday, opened a bond position today (as the market shows weakness). Thanks, great timing!
-
JMHi Raoul, Great piece! I'm trying to look for suggestions on how to balance being heavy this Bond market trade via TLT and also keeping enough dry powder to take advantage of what appears to be a big short opportunity once the S&P rallies. If you had to give a weight percentage of bonds versus dry powder (cash) for shorting how would you allocate? Do you think the bond move may work out first which means you could exit that position to take advantage of the short opportunity?
-
JCThe first forecast I saw about the downturn in the business cycle was by ECRI way back in May. It made sense then and still does. The only thing I do not understand is how bonds can rally so hard when there is supposed to be excess supply with QT and fiscal stimulus?
-
HOI agree that after the December hike the Fed will take a pause, and am expecting QT to pause indefinitely as well by the end of Q1. But it may still be too early to go all in on bonds. Big reason is US deficits and the probability that there will be some kind of infra program for the US next year. This may be enough to keep the US out of recession, if just barely. The compromise (for now) seems to be putting on a steepener, reserving judgement as to whether it is of the bull or bear variety until Q1.
-
DVHere some conclusions based the first 2 graphs from a nonfinancial retiree (wanting to preserve retirement capital) reading the data: 1. 2008 crash: related to LIBOR (liquidity problem). 2. 2000 crash: LIBOR not a significant factor. 3. Current risk is based on LIBOR (liquidity) issues. 4. Hard data is delayed roughly 6-12mo relative to market and LIBOR rates of change. 5. Sell market now or soon. 6. Based on LIBOR expect market bottom about 18mo or longer from now 7. Buy treasuries with greater than 18mo maturity, say roughly 5 years. 8. Reenter market up selling treasuries after market bottom. 9. It would be helpful to plot the 5 or 10 year treasuries on the same graphs. Please comment!
-
TSHas anyone floated the idea of doing a Master Mind group for these posts? I'd be willing to host one through google hangouts but I would need people to talk, last mastermind I put together I was one of 3 people who willing to talk. Goal: see how people are playing this and why they chose that path.
-
DSNice theses, and well explained (Economic slowdown will cause the Fed to pause > investors jump across to treasuries > with a possible short squeeze to assist the move). So this describes one part of demand. Some other parts of demand are declining (eg. Foreign central banks). I’d be interested to hear from Raoul what effect he thinks the big increase in supply will have next year (due to QT and the increasing deficit). Is it all a matter of time-frames..? I.e. bonds rally now due to the initial perceived slowdown, but then yields climb next year as massive amounts of new government paper come onto the market?
-
DBColour me confused. Two weeks ago Julian quoted Powell: "We may go past neutral, but we're a long way from neutral at this point, probably", and restated his view that the bull market in long bonds is over. Then a few days ago Raoul says "Just buy bonds" is his strongest held view in five years. If Julian and Raoul are so far apart on this, how is a poor retail investor like me supposed to make sense of it? I know Raoul is talking the next 18 months, but I don't see room for that play consistent with Julian's position. If two macro titans are in significant disagreement, shouldn't us mere mortals just stay away?
-
VGHi Raoul - great article. Using TLT, could you translate the actions you recommended in your article (Eurodollar 2 y/10 y) so one can consider taking a position using Options on TLT? And when should one commence building a position (ie Buy Calls on TLT/which tenors etc). At Julien and you now aligned on this approach? Regards
-
MFHi Raoul - I have similar query to the ones posted below. If you can bundle them up please feel free to do so. Would you share your view on what will happen with the sheer supply of bonds being sold in the market when the FED starts removing the buying backstop through QT, even if there is a higher open market demand.
-
CPTo my knowledge, no one has recently contrasted Raoul's bullishness on bonds directly with the prospects for "BBB" investment grade bonds to fall off the cliff into the valley of the junk (Danielle DiMartino-Booth's thesis). My understanding is that the "great recession" saw the bond market, some might say, split into two markets: government securities and everything else. Raoul, is there a reason you have not covered this topic? I would think that it makes sense to either address the BBB list and its prospects (or lack of prospects) to affect your macro view. Or, to clarify that when you say "buy bonds," you are specifically referring to US Government bonds (or whatever else falls into the category of being immune from BBB infection).
-
RKHi Raoul, According to the graph (TLT vs SPX), TLT has been very lagging to react to the SPX downturn historically. Given that fact is this the most effective vehicle in a time of the economic downturn? Thank you
-
VGHi Raoul Greatly appreciate your feedback on my comment of 26 Nov. Regards