Author Topic: Shorting bonds/treasuries  (Read 5788 times)

dpetrescu

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Shorting bonds/treasuries
« on: January 29, 2014, 09:08:11 PM »
I think interest rates will rise over the long term. That sounds like an obvious statement but not according to the market. Does anyone have any ideas on how I can set up a short or put over the long term (3-5 years +) I'm thinking about this in the following way:

1. Small position for Tail risk insurance - if rates rise very significantly
2. Practical insurance - gain from moderate rise in rates

Are there LEAPS ETFs available? Is there such a thing as bond options? Is there some arcane security available to set this up? I'm somewhat biased against gold so not sold on the Klarman long term OTM gold call setup.

PS...some people might not think too highly of Hugh Hendry because of his bitcoin comment but he presented an interesting argument about this in early 2010. When QE was underway everyone (including prominent value investors) was presenting the risk of hyperinflation (seemingly contrarian). Hugh, in true contrarian character, thought the risk was in deflation - however he thought that if significant deflation did occur in the near future, hyperinflation would then become a real risk. If anyone has an hour to spare this wad a great debate with some interesting characters
http://m.youtube.com/watch?v=tah6dq1T2G8


Compounder

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Re: Shorting bonds/treasuries
« Reply #1 on: January 30, 2014, 12:00:56 AM »
TLT

dpetrescu

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Re: Shorting bonds/treasuries
« Reply #2 on: February 01, 2014, 05:53:45 PM »
Thanks.

I think I might have to pass for now and research this further.

SpecOps

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Re: Shorting bonds/treasuries
« Reply #3 on: February 05, 2014, 05:16:20 AM »
There are other ways to benefit from rising interest rates. For example some companies in the mortgage world are set to benefit from rate rises, companies like PHH.

Also insurance companies get more income when interest rates rise, there may be some attractively valued ones.
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scorpioncapital

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Re: Shorting bonds/treasuries
« Reply #4 on: June 05, 2020, 12:04:03 PM »
Revisiting this, anyone look at going long TTT as a way to be short 20+ year bonds at the lowest levels in history? Even lower than when this article was written in 2014? What are the pitfalls? Are there better ways to do this ? (Like long an insurance company which will have higher leveraged income )