Sunday, June 28, 2009

Rationale for the TBT (2x Ultrashort Long Term Treasuries) Swing Long

I mentioned Friday I took a swing long in TBT. The rationale for this is for several reasons. If you read the blog you know I think yields are going to rise (taking bond prices down) on Treasuries due to ongoing supply of Treasuries as we keep issuing debt to fund "everything", inflation concerns, dollar concerns, etc. However, that is all longer term stuff and I already have a longer term short position in the TLT (long term US treasuries). So why did I add a swing leverage short to my book? Well, Treasuries have surged in recent days and look overbought and right at the 50 DMA (also hitting the downward trendline and the May lows). Therefore, shorting the treasuries at Friday's level seemed like a lower risk trade at that entry. See chart below.


  1. New to your blog. Nice reads here. I am also long TBT since Friday at 50.60. TBT bouced of the MA, seems like heading north.

  2. What makes TBT sink when bond auctions are under prescribed?
    quote: "Demand for the five-year notes was below average, measured by the bid-to-cover ratio of 1.92, the lowest in almost a year."

  3. Is this a good time to buy TBT ahead of august 5th?


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