Taking Advantage of the Fear Around a U.S. Debt Default

[Parsad]

Anyone looking at different opportunities to take advantage of the fear permeating markets around a U.S. debt default.  This seems to be almost a guaranteed short-term opportunity here to take advantage of the market's pessimism.  

 

For example, short-term U.S. treasuries are at unusually high yields and will drop once the debt limit is increased.  CDS on U.S. debt are trading above some emerging market debt CDS.

 

Any ideas?  

 

Cheers!

[Sweet]

I don’t see much dislocation that’s obvious, maybe drowned out by other macro concerns.  I remember the first time this happened it was reflected in stock prices across the SP-500, this has happened a couple of times now, maybe the market no longer believes it’s of much importance.

[Gregmal]

I recall 2011s summer drama vividly, but also dont see anything jumping off the page in terms of obviousness outside of GLD...which even there isnt super exciting but just kinda a decent short term IRR type setup. 

[gfp]

If you aren't able to trade CDS on US Sovereign credit (who is?  Why would you ever trust a counter-party on CDS for USA??) you are sort of limited to picking up some extra interest on t-bills like Berkshire is.  But that's for a month or two and that isn't big money.

 

It's important to not get your signals crossed when looking at moves that are short-term debt-ceiling related and inferring what that would mean in normal times.  But not a lot of opportunity for big trades related to the debt ceiling.

 

You would think there will be a big "catch-up" issuance of treasury paper once they are allowed to again.  The TGA will have been depleted and they are running large deficits.  So presently there is a shortage of government paper which creates shortages of "good stuff" used as collateral.

[changegonnacome]

5 hours ago, Parsad said:

For example, short-term U.S. treasuries are at unusually high yields and will drop once the debt limit is increased. 

 

Yep I'm rolling some cash laying around into bills which straddle the supposed date of "default".......MMF dont wanna hold them, cause why bother holding them if you dont have too type thing.....so they are stupidly high

[adesigar]

I sold off most of my non core holding. Hope to buy at a cheaper price if the market panics.

[aws]

I have a somewhat weird hedge because I'm expecting a large payment  (>10% of net worth) in Mexican pesos by early next month. I'm happy to see that the MXN is at 6 year highs and stronger again today.

[Dalal.Holdings]

Maybe members of Congress are asking themselves the same question to trade around their self created disaster

[Mephistopheles]

How about long VIX calls? VIX is at 16.5 which is pretty low