Shorting US Treasury bonds
Started Mar 13 at 6:00PM (EST) (By ramigabai)
As I'm pretty sure the fed interest rate will go up in the next 6 months.. does anybody know about an instrument that shorts the US treasury bonds?
What do you think about SHV?
What do you think about SHV?
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11 Comments
Top 1%
marketfeel
Mar 13 at 6:29PM (EST)
I use TLT
Top 1%
marketfeel
Mar 13 at 6:31PM (EST)
I use TLT to trade treasures. TLT is not an inverse fund though
Top 1%
IrishTrader
Mar 13 at 7:01PM (EST)
SHV is almost as stable as cash. Look at it's price history. How about using TBT?
Top 2%
NAJInvest
Mar 13 at 11:45PM (EST)
TBT is the short ETF I have found to take an effective short position in Treasuries.
Top 93%
ramigabai
Mar 14 at 3:21AM (EST)
Thanks guys.
TBT is a good choice, though it shorts 20 years bonds.. I think shorting the midterm 5-10 years bonds will have a better effect.
Top 1%
maven100
Mar 14 at 8:20PM (EST)
If you believe the interest rates will go up in the next 6 months. TBT is the best instrument..the longer duration bonds, by definition will have the largest adverse price movement.
Top 93%
ramigabai
Mar 15 at 5:01AM (EST)
Do you see the fed keeps the zero interest longer than that?
Top 1%
maven100
Mar 15 at 9:13AM (EST)
I think what matters is the change in perception of when the rates will be going up...rather than the actual time they raise...and i see the signs that make me believe that the rhetoric about fed raising rates sooner than expected will pick up soon..
Top 1%
beancounter
Mar 15 at 10:52AM (EST)
I use a fund for this RRPIX (Rising Rate opty fund) and I buymore when TLT rises in price. I think longer term there is no escaping rising rates. I agree with maven's point that if you want to go out further on the curve and not use a fund, TBT is about the best game in town.
Tthe dollar can pull rates higher as well.
Short term risk is a flight to (cough, cough) "quality" in Treasuries and the dollar that a weakening euro, Greece, (insert European risk of the moment here) or other emerging market event might bring, but I would use that to add to a position.
On the other hand, we could be Japan in 1989. :-)
Top 93%
ramigabai
Mar 15 at 11:30AM (EST)
On the other hand, even though I believe the rates would rise, the Fed must protect the integrity of the US economy by not allowing the interest rate on the huge national debt to rise. Even a 1% rise in interest rates would cost the USA billions (maybe even trillion)dollars! The Fed is NOT afraid of the Chinese or the international attitude toward the 'reserve currency' dollar.
Top 1%
beancounter
Mar 15 at 12:09PM (EST)
That would occur on the short end of the yield curve as the bulk of our debt is shorter maturities. The Fed has greater influence on that end than on the longer side (>10 years). So if long rates rise, and the short end stays low,that is supposedly a prescription for recovery, but as you correctly point out, if the Treasury issues more debt at longer maturities, it will result in higher interest payments.
This whole losing AAA status is very interesting theater as well. Does anyone give a #@($ what Moody's says anyway?