Friday, August 13, 2010

Short Bonds? TBT

Add to Technorati Favorites Subscribe in a reader

In a recent article on and also in a tweet, Doug Kass, president of Seabreeze Partners is saying to short bonds as stocks begin to move towards the upper end of his range for the S&P 500, which is 1150.
He believes that by going long ProShares UltraShort 20+ Year Treasury (NYSE: TBT), this provides a better risk/reward opportunity than going long stocks. Kass has previously been bearish on the bond market as he believes that yields are way too low. However, the TBT continues to trend lower, down nearly 2% intraday today. Is it at a bottom or will investors continue to buy bonds, after all overbought can continue to stay overbought?
In the chart below looks at the TBT against the 10 year Treasury yield as well as the 30 year.Not really sure if now is the time to enter the TBT, but I respect Mr. Kass and wouldn't bet against his judgement. Definitely something to keep on the radar.

Two interesting reports to read: Doug Kass Adding To TBT LINK  Buffett's Lesson on Inflation and Bonds LINK

No comments: