Friday, August 5, 2016

Squeeze the Bonds

Short of ideas for a title I settle on the aforementioned.

It is my belief that way too much money is parked in the bond market. In order to get that money to come back into circulation the governments of the world will have to let inflation get going good before any raising of short term interest rates. They need to flush some of the money OUT of the long bond markets. Any rising of short rates risks an inversion of the yield curve.

Squeezing long bonds would mean a squeezing of yield shorts. The reach for yield may be coming to an end as the economies of the world start to improve. Todays Robust Jobs Report is evidence that the U.S. economy continues strong. I think it is only a matter of time before the rest of the world follows. Emerging markets (EEM) continue to look strong in the face of strong U.S. data.

I am making bond shorts a core long term position. TBT is the vehicle of choice.

Will be controlling risk however......


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