Well here we have it ladies and gents.
U.S. Treasury Bonds, and other risk-off assets across the board are printing new highs.
Since the beginning of 2017 I've held bonds spread between medium and longer term dated maturities on my book. Why? Because they were simply within a buying area and with rates in a constant state of decline after peaking in the 1980s (peaking in 1981) there is only one trade that I will continually do: Go Long U.S. Treasuries on large pullbacks to major support.
My outlook on developed markets is simple regardless of what other's views are. Artificial stimulus has become the status quo of developed economies around the globe. Thus creating a very fragile balance between debt yields and economies printing positive growth even if it is at 1-3% growth. Higher rates deteriorate that growth, inflation is no where near an area which negates rate hikes exceeding 3% on the 10 Year Maturities for example... For rate bulls, the recent rate hike was a meager hike which almost borders the insignificant.
In simple, my views on U.S. Treasury market prices can be considered constantly bullish. When bonds were trading at 131"28 guess what my bias was? Answer: Bullish.. When the 10 Year is selling off during Q4 2016 guess what my bias was? Answer: Bullish. On and on, I'm sure people get the point. Markets have become so dependent on lower and lower borrowing rates that it would take some incredible brain power and quite frankly luck to create a market not dependent on low borrowing rates on their debt. Until that status quo changes I'm bullish bonds. Guess what my bias is if this specific trade goes against me and I get stopped out? Still bullish, and I'll buy at a much lower price.
I'll end with a disclaimer for traders new to the business. Just because me or anybody else displays a long term bullish / bearish bias on an underlying asset class does not translate into an active position on our books. We all eventually initiate a position based on whatever risk multiples we use to calculate position sizing, stops adjusted to underlying volatility, different methods to trade around positions, interest / dividends collected lowering risk by low multiples, etc. And no this doesn't mean I'm bearish equities (I'm long biased for the time being until proven wrong or major economic indicators say otherwise), I just understand the reality I see on my own personal analysis of capital markets.
Trade smart and with a plan. =)
U.S. Treasury Bonds, and other risk-off assets across the board are printing new highs.
Since the beginning of 2017 I've held bonds spread between medium and longer term dated maturities on my book. Why? Because they were simply within a buying area and with rates in a constant state of decline after peaking in the 1980s (peaking in 1981) there is only one trade that I will continually do: Go Long U.S. Treasuries on large pullbacks to major support.
My outlook on developed markets is simple regardless of what other's views are. Artificial stimulus has become the status quo of developed economies around the globe. Thus creating a very fragile balance between debt yields and economies printing positive growth even if it is at 1-3% growth. Higher rates deteriorate that growth, inflation is no where near an area which negates rate hikes exceeding 3% on the 10 Year Maturities for example... For rate bulls, the recent rate hike was a meager hike which almost borders the insignificant.
In simple, my views on U.S. Treasury market prices can be considered constantly bullish. When bonds were trading at 131"28 guess what my bias was? Answer: Bullish.. When the 10 Year is selling off during Q4 2016 guess what my bias was? Answer: Bullish. On and on, I'm sure people get the point. Markets have become so dependent on lower and lower borrowing rates that it would take some incredible brain power and quite frankly luck to create a market not dependent on low borrowing rates on their debt. Until that status quo changes I'm bullish bonds. Guess what my bias is if this specific trade goes against me and I get stopped out? Still bullish, and I'll buy at a much lower price.
I'll end with a disclaimer for traders new to the business. Just because me or anybody else displays a long term bullish / bearish bias on an underlying asset class does not translate into an active position on our books. We all eventually initiate a position based on whatever risk multiples we use to calculate position sizing, stops adjusted to underlying volatility, different methods to trade around positions, interest / dividends collected lowering risk by low multiples, etc. And no this doesn't mean I'm bearish equities (I'm long biased for the time being until proven wrong or major economic indicators say otherwise), I just understand the reality I see on my own personal analysis of capital markets.
Trade smart and with a plan. =)
I still hold long exposure that is diversified thru a market neutral approach on TLT.
Overall, my thesis is simple: I'm bullish bonds, and neutral to bearish equities for fundamental & technical reasons. I display this outlook by holding bullish bond positions. I hold no short positions yet against any major sector or market index; I tried once already and took a controlled loss against the banking sector.
If you are wondering, I am not a perma-bear/bull. I do hold bullish equity positions which I got into months ago, but as of right now I do not wish to buy any more equities at this time.