Jump to content

US Treasury Bloodbath Soaks Fund Managers


Recommended Posts

Yeah I mentioned a simlar thing about the bond market here: http://cornerofberkshireandfairfax.ca/forum/index.php?topic=652" data-ipsquote-contentclass="forums_Topic" 5425#msg5425


Long term govt treasuries were in a bubble, due to sheer fear. If you're getting negative real yields (after inflation) there's no way govt bond prices are going to be sustained at the high levels that we saw a few months ago, and thus a sell off was bound to occur.

"If I were clairvoyant and knew we were going to have a sell-off of this magnitude, I would've been all in cash, but I'm not,"


I would disagree with this quote, and say that better yet ... a bet, by shorting long term Govt. bonds would have been a good one (as opposed to cash) during the point of maximum fear we saw in Q408 or Q109. Contrary to popular opinion, long term US Govt. bonds were one of the most riskiest asset classes for investors. If the US Govt. were a company, I think Moodys and S&P would have downgraded the govt. to "junk status" by now. If a fund manager had invested in long term govt bonds during Q109, I would be really skeptical about their ability to invest, and would question whether they are just following the herd and accumulating assets.


As a good illustration one of the bond instruments I'm in; TBT, an ETF for the inverse performance of long term US Treasury Index (i.e. shorting long term govt bonds) has been up quite a bit since the March lows.




The bond markets have been where all the action is during this credit crisis.

Nonetheless, I would venture to guess that we will continue to see a sell off in long term US-Govt bonds as the economy recovers.



Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Create New...