While the bond market blood bath may scare some, I believe it is an opportunity to catch a fly with chopsticks Mr. Miagi style.
The narrative that bonds are selling off because of inflation fears is oversold hype and Guggenheim's CIO Scott Minerd and PIMCO's head of short-term management Jerome Schnieder agree.
Inflation is transient and with a liquidity supernova descending upon the markets, this will push short-term rates down leaving fixed-income investors chasing long-term (duration) bonds. The Fed itself will likely introduce some type of Twist style program expanding purchases of duration bonds. Add in the upcoming SLR exemption expiration and the historical long-term trend in the decline in the US10Y and the case for lower rates becomes very sexy.
SLR exclusion exemption may not be extended. Democrats are demanding higher banking restrictions. No SLR extension creates a bottleneck for O/N repos and warehousing. ft.com/content/91f43572-414c-48d1-af80-857b9fa2fb18
There is also a strong technical case as it is oversold and we've had a very bullish engulfing reversal candle. This looks primed to explode any day now. Additionally, the US10Y looks overbought with the classic evening star doji.
Minerd believes rates US10Y will hit -.5% by 2022. While I think that is a little on the extreme end of the range, I do believe 1.15% to 1.25% in the near term is realistic with .5%.
Disclaimer: At the time of writing I do hold longer-dated expiry ITM TLT calls.
If Minerd is that bullish on bonds gold miners will be a strong play. Get em while they're cheap!
skinnaj
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Have you thought about selling out of the money puts around $125?
BMLemon
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I for one appreciate the perspectives of the contrarian. Especially when narratives reach very deep into mainstream media.
JapaneseCandlesMadeMeRich
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Nice! I see those last candles dont have too much momentum but i can see with weekly charts what your vision is, Seems like everythings a green light to go to the moon BUT the volume so hold off till you see the volume exceed its average. Happy trading!
T-r-X
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I consider Scott Minerd as the dumb money. I still remember his S&P500 prediction of 1500 in april 2020.