Everyone loves junk bonds and hates Treasury bonds. That’s an opportunity:
Source: Yahoo Finance
-
Hat tip to EWI’s Financial Forecast (just released) for reminding me to check on this chart.
- Tags: bond spreads, corporate bonds, JNK, Junk bonds, LQD, TLT, treasury bonds
-
(No Ratings Yet)
Loading ...
7 Responses to “Long TLT, short JNK”
Leave a reply
Most Viewed Posts
- Treasury-only money market funds - 10,016 views
- The next bubble: cash. - 9,069 views
- 90 day T-bill rate drops to 0.23%. What’s next, negative yields? - 8,459 views
- Inverse ETFs vs. LEAPS puts - 7,901 views
- Why bailouts will not stop the depression - 6,196 views
- About - 5,721 views
- Commodities bubble bursting - 5,529 views
- Listen to the people who predicted this: No bailouts, no New Deal, no serfdom. - 5,028 views
- On Black Thursday, 1929, the Dow closed down 2%. - 4,905 views
- Jim Rogers quote: - 4,438 views
Recent Posts
- Jul 23, 2010 - Dollar sell-off about over?
- Jul 19, 2010 - CHF & EUR: 2008 dead-cat redux?
- Jun 29, 2010 - One year later, a real head and shoulders?
- Jun 25, 2010 - Relief rally coming?
- Jun 23, 2010 - Is the bounce about over?
- Jun 14, 2010 - 2011 Dividend tax increase cuts real value of S&P500 by 30%.
- Jun 13, 2010 - Shiller on double dip in housing, retail, personal saving.
- Jun 9, 2010 - Iranian central bank dumps euros for gold and dollars.
- Jun 9, 2010 - Gold shifts to negative beta vs. stocks
- Jun 9, 2010 - Beck, Woods & Maltsev on Hayek
- Jun 9, 2010 - Cops retiring as millionaires
- Jun 8, 2010 - Eric King interviews Felix Zulauf
- Jun 8, 2010 - David Einhorn: Scrap the official ratings agencies (Moodies, S&P, Fitch)
- Jun 4, 2010 - Time for a bounce? (euro, stocks, copper, oil)
- Jun 3, 2010 - Applsauce
Recent Comments:
- One year later, a real head and shoulders? - Graphite: Mike, your post helped me decide to close the short leg of a...
- One year later, a real head and shoulders? - CP: Now we’re talking - let’s look for an energy company...
- One year later, a real head and shoulders? - Graphite: I’d also imagine the oil sands producers would be juicy...
- One year later, a real head and shoulders? - Graphite: Crude oil has the most liquid futures options market of all...
- One year later, a real head and shoulders? - Mike: If leverage is what you’re after, futures offer all anyone...
- One year later, a real head and shoulders? - CP: There’s got to be a better way to short crude than the...
- 2011 Dividend tax increase cuts real value of S&P500 by 30%. - panama red: This week BP Aug 11 bonds dropped to...
- 2011 Dividend tax increase cuts real value of S&P500 by 30%. - Jui: Do dividend taxes really matter, though,...
- 2011 Dividend tax increase cuts real value of S&P500 by 30%. - Mike: Thanks, Pej. Glad you noticed that....
- 2011 Dividend tax increase cuts real value of S&P500 by 30%. - seaterk: I noticed that Diamond Drill is at the...
AudioTactics
January 8th, 2010 at 12:15 pm
Does it make sense to put this trade on using TLT and JNK from a duration perspective?
Is that how you entered this trade and did you do it in a 1 for 1 ratio?
Mike
January 8th, 2010 at 12:26 pm
Sure, from a pure spread perspective, it would make more sense to use 7-10 year T-notes.
I’m warming to the 30-year though.
Mike
January 8th, 2010 at 12:31 pm
IEF would be the ETF proxy for 7-10 year Treasuries.
Mike
January 8th, 2010 at 12:38 pm
….using mid-duration Treasuries, I’d be inclined to go heavier on them than JNK.
CP
January 9th, 2010 at 1:12 am
Your trade comes with a headwind though, because all debt is priced off of Treasuries, and if Treasuries rally then that is bullish for JNK as well.
I agree with your premise, though, and suggest shorting equities and buying Treasuries.
CP
January 9th, 2010 at 1:20 am
Mike,
Some WS firms are *still* touting a long-risk, short-sovereigns trade, i.e. buying securities of TBTF firms and selling government debt.
Really? That was a great trade in Mar 09, but now it is the height of foolishness.
What happens to that trade if Hank Paulson and Tim Geithner are clapped in irons and the bailouts are rescinded as a criminal conspiracy to loot the Treasury?
Mike
January 9th, 2010 at 5:34 am
CP
The idea is the spread - it doesn’t matter if both go up, if T-bonds/notes go up more.
But check your premise - corporates crashed in 08 as Treasuries rallied.