The Long Bomb: Model Portfolio Update

• Gregor Macdonald
• March 24th, 2010

A notable day today in the newly treacherous landscape of US Treasuries, where prices were roughed up pretty hard as the US Dollar rose strongly. (I suspect it’s not often one gets to pen the news of those two assets moving fast in opposite directions, so I thought it best not to miss the opportunity). German Bunds and UK Gilts did not have a good day either. Thus, we come ’round again to the persistent question (and conundrum): where’s the safe haven? In sovereign credit, there is none. Let’s take a look at the price chart for the 30 year bond which, in the past three days, was looking very much like the long bomb:

The “Bond” has lost nearly four points in just the past 3 days of trading. Our position in TBF, the Proshares Short 20+ Year Treasury ETF, which has been weak of late, was of course quite strong. But perhaps the most important relationship to note is that the long end of the US Treasury curve is experiencing renewed weakness right into the face of new weakness in the housing market. Or perhaps I should say: the newly reported weakness in the housing market. Subscribers here know…(this article continues for subscribers through the membership gateway, on the right side of this page)

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More from Gregor Weekly

• Gregor Weekly Model Portfolio Update: 23 September 2009
• MBS Catch-22: Model Portfolio Update
• Roll On Sovereign Hockey Puck. Roll On: Model Portfolio Update
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• Silver Flashing: Model Portfolio Update

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Tickers: FXA FXC, TBF