Wow, what garbage reporting. They have zero clue about futs. Money Morning "news you can profit from" My ass. Only paulson can trade 5000 lot? This is what happens when itt grads get together and open a website.
Of course, Reagan was the champ, with 18 debt ceiling hikes during his administration. Hell, that's basically a restatement of Obama's position...
The trade may be a good one, same with zerohedgers. But this article is fubar about the size of the trade. They don't seem to understand derivatives and are drooling over the size in amazement.
Initial margin is about 25 million dollars. that will cover about a 3 point move. To lose $1 billion on this trade bonds would need to rally over 100 points The media always embellishes the risk of futures.
Im always amazed at how patriotism (an emotion) rules over common sense and fact among American traders. These are the facts: - over 50% of US debt is held overseas. - the majority of this debt is held by Chinese - the USA is already technically bankrupt - although a small income tax increase will ease the situation, the american public will never want to pay more tax in the short term, even to escape the turmoil of what we see happening in Europe. - interest rates cant go any lower, they can only go one way from here. What will that do to yields.....?...... To my thinking, this trade is a no-brainer. The telling thing is the timing of the trade, and the way it was executed, not the fact it occurred. Get a bucket! Some of you are gunna be sick......