Registered: Jun 2006
12-18-07 11:00 PM
Quote from richard_m:
I entered short on Sunday globex open at 113-26. So far I am getting zapped. Anybody else in a short "position" trade? I need cuddling.
I've written a lot on this, and used to be a bond bear (for inflationary reasons mostly. $95 crude, 6%+ real inflation and 4% yields long duration don't quite jive)... i'm now converted. If the prognosis for the economy is lousy, I think long duration yields will gravitate towards a flattening curve in relation to the short duration (which means 30-40% upside against a short). And thats right, commodities will likely take a hit as demand slows and y/y inflation numbers will turn *negative*.
Only in hindsight will 4.0%+ yields on long term maturities seem crazy considering the condition. Thats your bull case.