March 22, 2016
I believe Treasury Bonds are about to fall off the biggest cliff anyone in the bond trading community has EVER seen.
As I have pointed out in previous newsletters, Treasuries do at times just go STRAIGHT DOWN and that is PRECISELY what I perceive as being IMMEDIATELY AHEAD (literally) in this market.
With the Dow now having rallied over 2000 points, I think it is safe to say all the January malarkey about China weaknesses affecting our own markets and economy are now definitively in the rear view mirror…which I think was the ONLY thing keeping our rates low…and Bond prices on their highs.
I will repeat what I’ve been saying for some time now…OUR ECONOMY IS VIBRANT, BLOOMING AND STARTING TO BOOM EVERYWHERE…AND…INFLATION, WHICH, BY FAR, IS THE BOND MARKET’S WORST ENEMY, IS DEAD AHEAD…PERHAPS SERIOUSLY SO.
A few charts that I think signal that inflation IS imminently ahead…and I mean MONTH BY MONTH FROM HERE FORWARD…
EVERY MAJOR CENTRAL BANK ON THE PLANET WANTS INFLATION AND THEY ARE DOING EVERYTHING THEY CAN TO CREATE IT…AND THEY ARE GOING TO GET IT.
INFLATION IS THE WORST THING THAT CAN HAPPEN TO THE TREASURY BOND MARKET. PERIOD.
THE SECOND WORST IS A STRONG ECONOMY AND STRONG JOB GROWTH.
AND I AM SAYING THAT BOTH OF THESE BOND MARKET “ENEMIES” ARE EITHER ALREADY PRESENT OR DEAD AHEAD ON THE HORIZON.
Check out this next chart and ask yourself if inflation is…or isn’t…likely to be coming back…
I THINK INTEREST RATES HAVE NOWHERE TO GO BUT UP FROM HERE…AND I MEAN RIGHT HERE, RIGHT NOW…AND TREASURY BONDS AND EURODOLLARS THEREFORE HAVE NO PLACE TO GO BUT DOWN.
I CONTINUE TO RECOMMEND BUYING PUTS IN BOTH OF THESE MARKETS.
DOES 150 look like a big move?
Here are the
Eurodollars…These are short term interest rates…They have nothing to do with
Open your eyes guys…This is not BS…I think there is NO WAY rates stay down here…and I mean, literally, for even another week…Like I said, all the malarkey about China falling apart that scared the stock market (and kept Bonds up) in January is now 2100 points behind us on the Dow…and NOW RATES ARE ALREADY HEADING UP. Look at the charts…Both Bonds and Eurodollars made their highs…or the lows in rates….over a month ago, and I firmly believe the move down in both markets is definitely underway…and I’d add, I think they are about to shift into a MUCH higher downside gear.
So call me and do something with this…I’d say do a little in the Bonds and maybe do the Eurodollars in 5 put units at a total cost of $1710…If short rates just go up another 3/4 percent…in the next 8-9 months…that $1710 would be worth somewhere around 10K…Obviously, if rates DON’T go up, and the December Eurodollar is still above 99.00, you would lose the entire $1710.
Enough said…Get some…I can’t be any louder.
The author of this piece currently trades for his own account and has financial interest in the following derivative products mentioned within: Treasury Bonds, Eurodollars