It makes me uneasy when too many people agree with me…
All over the place, I see signs that people agree with me, and it’s making me increasingly uncomfortable:
- The End of the Bond Bull Market: Barry Ritholz writes in The Big Picture that the bond bull market we’ve been seeing since 1981 looks like it might be ending. He uses charts to like this to make his point:
The problem is that I agree with his assessment. The model for the monetary authorities was Japan, which was able to ramp up QE, keep zombie banks alive for 20 years, and borrow at 0%. The US, however, is not in the same position. We are not a nation of savers, like the Japanese, so we can’t self fund our low rates, for starters. Our QE will not end with low rates. - We spoke weeks ago about going long the dollar versus the Euro and the Yen. Part of the motivation of that trade was that speculative positions had gotten too one-sided against the dollar. Another part was the insight that Europe and Japan were not in better economic positions as the currency market was implying. Well, that too seems to have become more mainstream as the DXY has gone from low 70′s to high 70′s-low 80′s. And then I read that there are the largest ever speculative short positions against the Euro: http://www.ft.com/cms/s/0/0330ba78-149f-11df-9ea1-00144feab49a.html. Now $8 billion might not sound like a lot given the numbers our Congress throws around, but it is a large floor (implied bid) for the Euro as these shorts need to cover at some point.
Just some morning thoughts.
Last 5 posts by Yaron Sadan
- That sinking feeling - May 18th, 2012
- Opportunity on the horizon - May 18th, 2012
- Early can hurt - May 16th, 2012
- Diversify your Diversification - May 15th, 2012
- Losing Money Isn't a Crime - May 15th, 2012
Tags: bonds, dollar, Euro, treasuries, USD
Currency, Fixed Income/Bonds | Yaron Sadan | 
February 9, 2010 11:50 am
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By MacroMan, February 9, 2010 @ 8:34 pm
Im not a real fan of running with the crowds but this time if the crowd is right….look out!!! With the financial situation of the US GOVT deteriorating quite rapidly…just the thought of people BOYCOTTING an auction or keeping durations short would feed on itself. It almost seems a given that rates are headed higher.