Monday, October 18, 2010

Bookkeeping: Closing iShares Barclays 20+ Year Treasury Bond (TLT)

This ETF definitely took a turn for the worse last week - I flagged it mid week as a potential divergence (although in this market divergences mean nothing) but Thursday and Friday it really took it on the chin.   The only explanation I can think of as QE approaches is the Fed will be targeting shorter durations - i.e. 3 year, 5 year, 7 year and the long end of the yield curve now prices in some form of inflation.   But people much smarter than me might have better thoughts.   Goldman told us 2.4%ish 10 year bond would be the bottom a few weeks back, and as a primary dealer and most important private company on Earth, they might have nailed it.

Only a 1.4% loss on the remaining stake as this is 'slow money'.  This was a 'hedge' by the way; technically a 'short' for our bookkeeping purposes.  Like all the other shorts it did its job in losing us money the past 7 weeks.

No position


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