Marketwatch has a lead headline with a cute cartoon about a possible bubble in bonds (link).
Retail investors have been pouring money into bond funds. The driving forces behind the stampede include: low CD rates and money market rates, and volatile equity markets.
Bonds have rallied on the news from Europe, so seem more vulnerable than a few weeks ago when TLT was 89/90.
Do CD rates have to start on up before folks will start fleeing bond funds, or will bonds be sold on anticipation of higher short term rates? Many pros are already either hedged or actively shorting based on fundamentals. When will the average investor make the move? I don't have a solid answer, but still believe as long as headlines and pundits warn of a bubble, the bubble isn't ready to deflate. The bubble is more likely to expand a bit more.
TLT and TBT were talked about during the ThinkorSwim market wrap. Anyone can listen, non-customers have to register. This week the TOS website link is having issues. Anyway, the anecdote is that one of the participants surveyed a room full of 400 people at a seminar. The question was "how many think interest rates are going higher?" Almost every hand went up. The second question, "how many have that position?" Only one hand went up. Now, the caveats are that this is anecdotal. The ThinkorSwim seminar participants mostly focus on options on stocks. So a person could justify either position based on the anecdote. Everyone is bearish on bonds, but only one trader is actually in the position.
Long BRKB, GLD, SPY, TLT
No comments:
Post a Comment