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jpatter666
05-21-10, 06:48 PM
Couldn't resist, I nibbled a little bit with a 38 order that I never expected to get filled.

Even in the 2008 crash this thing only got to 36. Now I know it's got decay (although it doesn't seem as bad as many doubled-levered ETFs) but this almost seemed a no-brainer.

Which means I've missed something....

Curious to see if anyone else if looking at this.

flow5
05-21-10, 10:19 PM
Great trade.

I'm sure somebody with some time could accumulate the volume of debt which falls in each of these buckets in order to get a more precise picture:

Thoughts on the INTEREST EXPENSE on the Federal Debt

If yields rise, security values will fall. So the banks could take another hit to bank capital adequacy ratios. The average maturity in governments is 4 years. Just think, the interest rate payment (.25%) on excess reserves ($1,009,469T), exceeds all 4-week bills, 3-month bills, & 6-month bills. The yield curve is steep.

2008 Sept. rates on 3-month bills was c. 1.7% before the downswing in Aug, now (.16%) [10x], 4-week bills 1.5% then (.15%) now [10x], 6-month (.23%) now, 1.9% then. [8.3x]

So these short-term yields are going to explode, multiplying by perhaps 5-6x if yields returned to "historical averages".

1 year constant maturity now (.36%) 2.3% then [6.4x], 2 year constant maturity now (.80), 2.5% then [3x]. 3 year constant maturity now (1.5%) 2.9% then [1.9x], 5 year constant maturity (2.3%) now, 3.4% then [1.5x].



The Treasury Department said Wednesday that the federal deficit for April soared to $82.7 billion, the largest imbalance for that month on record. That was significantly higher than last year's April deficit of $20 billion and above the $30 billion deficit that private-sector economists had expected.

Jim Nickerson
05-21-10, 10:31 PM
If anyone is convinced going long TBT is a "great trade" or is a "no-brainer" purchase, then how much of one's portfolio is one putting into this sure-thing?

If I knew a sure-thing investment, I'd put 100% or maybe 110% into it. So how deeply are you fellows convinced of the money making potential of long TBT right now?

jpatter666
05-22-10, 09:45 AM
"then how much of one's portfolio is one putting into this sure-thing?"

Very little. ;-)

That's why I said I only nibbled. Like you, I'm suspicious I've missed something.

But, I was wanting some for this particular account and at 38, seems far more potential upside than downside. Certainly seemed more up than downside