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1) No 2) No Would you like me to elaborate?

Fine, we can discuss the relative merits of the two different theories later... If this paradox makes more sense to you, does that mean that you're now, in essence, agreeing with Kocherlakota's conclusion that low nominal rates can actually increase the probability of a deflationary outcome?

I am in the camp that thinks that outright shorting USTs is a poor risk/reward trade. I like other ways to be short.

This is pretty good too (on the subject of bonds and/or Japan): http://brontecapital.blogspot.com/2009/01/lessons-from-shorting-jgbs-credible.html

Montier's blog has a really nice piece on bond valuations: http://behaviouralinvesting.blogspot.com/2010/08/bond-bubble-sterile-debate-on-semantics.html Finally, someone looking at the issue exactly the right way, IMHO. Even though I disagree with his conclusions, his method is absolutely...

I am saying that low rates may, in fact, lead to expectations of deflation. It's well known that expectations can, in fact, lead to realization. This is how it works for inflation, so I see no reason for it to work any differently for deflation.

Do you occasionally produce a grammatically correct statement or are they all like the one above?

Do you even understand the argument?

You're being a bleeding eeejit, IMHO... If you want to use bone's services, do your own due diligence. If you're simply expressing your opinion, you have now made it abundantly clear, as have others. Your incessant rants make no sense, as others have pointed out, and you refuse to argue...

But what does that have to do with the Fed?

Goodbye, Ivan, we hardly knew ye... Good-night, Sweet Ivan, and flights of angels sing thee to thy rest... Le Ivan Est Mort, Vive Le Ivan!

What a damp squib... Here we go back.

Ah, yes, I stand corrected... I assumed tj was banging on about the same subject as one of his other threads.

Yeah, of course, my bad... I forgot the details of the trade. You not tempted to cover your short 130 calls here?

To be honest, tj, I am really much more interested in your answers to the questions you have posed. I have a suspicion that, like with other matters you've chosen to voice your opinion on, you are rather less informed than you think you are. Here are my answers, regardless: 1) 0.5 in most...

If your options were onto the Sep10 2yr note contract, they should have expired this Friday. Given that these are physically-settled, you might now be long some Sep contracts.

Well, this is exactly my point, tj. What you're describing is emphatically NOT the duration-neutral 2s10s spread, but rather a 2y forward 8y cash-for-cash forward. 2s10s spread is where you buy/sell roughly X notional of 2yr bonds vs selling/buying X/5 (roughly) notional of 10yr bonds. Even...

Arbitrage, to me, implies availability of costless risk-free profit. FX fwd (or futures) vs FX spot is only risk-free (to a practical extent), if you're able to fund your spot positions better than what's implied by the fwd mkt. There are some interesting recent examples of how this "arb" can...

You might try filthy's new book: http://www.amazon.co.uk/Option-Trading-Volatility-Strategies-Techniques/dp/0470497106/ref=sr_1_1?s=books&ie=UTF8&qid=1283018153&sr=1-1 There's a chapter in there on options mkt-making.

I don't know, so at best can only hazard a guess that your broker's "best sell" and "best buy" are their equivalent of bid and ask.