The long End Of Yield Curve will steepen. Inflation running hot and CB can't hike rates. Nobody will buy 20-30Y. Yields Run, TLT Plummets Double Top with Divergence. Both, fundamentals and Technicals there. This may be the only trade you need to make this year.
Everyone will continue to believe inflation is under control until they don't. This is a trade we can actually see happening in front of us but, nobody has this priced in yet.
You really want to go against a 13 yr trend line? The rally will take longer this time though...its 12 - 24 months
I'm just trading the chart in front of me. TLT will tap out at 200-220 at 0%... its been the trend since GFC
logica
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@logica, as of jan 29, 2022...jnk/tlt trendline *still* in tact. If it holds...that means TLT is not dropping much from here. If it doesn't hold, then you I would reconsider my thesis.
CptSafety
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@logica, One of us was bound to be right. Hopefully, the risk was managed well. Tag me in your next post, you've had some solid plays in the past. Cheers.
logica
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@CptSafety, haha as always... one thing that i learned recently... bonds and stock market are correlated in a high inflation environment.
In deflation or low inflation environment it's inverse...
We still have yet to see how this plays out...lets check back in a year ;)
ijustwanttomakeatrendline
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Do you really think the bond market is so incredibly wrong? I think you're going to get slaughtered on this trade.
CptSafety
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@ijustwanttomakeatrendline, I'm not saying the bond market is wrong. I'm saying it is artificially suppressed and will retrace towards breakeven. If the bond market is wrong, then I would make even more money.
@T-r-X, Their mid-year outlook had 10Y yields going to 2.00-2.25%. So, you'd at least expect 20Y and 30Y to be level with that or higher with inflation expectations. Remember TLT goes up when yields go down.
CptSafety
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@CptSafety, Sorry if the last bit seemed condescending if you already knew. Included it for those that may not already know.
I'm just trading the chart in front of me. TLT will tap out at 200-220 at 0%... its been the trend since GFC