Hedging Bonds

Discussion in 'Risk Management' started by AlphaGeneration, Jan 26, 2010.

  1. I'm looking to buy the following bonds through ETFs (that don't have options). How can I hedge against declines in these bonds (independently)...by only using other ETFs/stocks, options (so no credit default stuff, etc...)

    -Junk bonds
    -US Investment grade bonds
    -Global bonds
    -US Long Term Bonds

    Can this be done by shorting gold?
  2. You don't ask for much, do ya?
  3. wave


    For Munis:

    Market Vectors Short Municipal


    Collapse of the Municipal Bond Market around the corner?

    Folks thought 2008-2009 was bad. Wait till you see what's around the corner.
  4. dhpar


    the only way to hedge against decline in these bonds is to sell them. :cool:
  5. 1) iShares.com------> click on "Fixed Income" for ticker symbols.
    2) You can hedge treasury securities with note/bond futures and options if your ETF position is large enough.
    3) The bond market's correlation to gold isn't consistent nor coherent enough for "hedging". :)
  6. wave


    A correlation analysis will help as well.
  7. dhpar


    that's the way to hell - i am sure you meant it only as an academic exercise...
  8. wave


    I agree it is, unless one has it all automated.
  9. wave


    President Obama's state-of-the-union message about federal and state discretionary spending could be the catalyst/trigger to short the muni bond market.

    Borrowing to Build vs. Borrowing to Pay a Deficit. Hmm, like Cali, just postponing the inevitable but with more debt.