Kass: Shorting Bonds, Yields Will Rise

“[I am] adding long ProShares Short 20+ Year Treasury (TBF) (inverse bond ETF at $23.91) to my Best Ideas List, as I now expect a steady but slow rise in bond yields over the next few years. …

“Growth signposts remain weak –- and this is now well known and grounded in consensus. China and Japan are slowing. The US is traveling at a subpar 2% to 2.5% growth rate and, while showing some improving trends, the eurozone is operating at about 1% to 1.5% growth. It is generally recognized that the unbelievably low sovereign debt yields around the world are serving as “gravity” to contribute to lower US rates.

“While I remain of the view that global growth will be subpar, I suspect that bond prices around the world have now more than discounted this. Moreover, the peripheral yields in Europe likely represent, to me, a parabolic move in bond prices, which are ‘bubble like’ and unlikely to be sustained at such low levels. Should ‘loss of faith’ occur in the ECB and other central bankers, that bubble might quickly burst.”

— Excerpt contributed by Jason Kelly


Z-val: Doug Kass
Via: Tumblr
Date: 4/1/15
Disposition: Long-Term Bearish
20-Yr Treasury Yield on 4/1/15: 2.23%
20-Yr Treasury Yield on 4/1/16: 2.20%
Change: -1.4%
Judgment: Wrong

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  1. Posted April 26, 2015 at 1:52 pm | Permalink

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