Great article. I didn't see it, although I've seen parts here and there that went into that.
I think this is clearly the most stunning and unsustainable imbalance going forward ... an investable theme.
Short long-dated U.S. treasuries/Long USD
- Thread starter ByLoSellHi
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Great article. I didn't see it, although I've seen parts here and there that went into that.
I think this is clearly the most stunning and unsustainable imbalance going forward ... an investable theme.
Einhorn and a bunch of other people certainly think so. These past few weeks there's been a lot of flow expressing this view through payers (mostly 5y5y).
Now this trade makes sense if you're prepared to buy some cheap 'Japan blowup' options and write the premium off. However, from some very painful and bitter experience with JGB linkers and floaters, I have learned that, if you're a foreigner, it's very likely that, when push comes to shove, the domestics will eat you for breakfast without blinking an eye. A trade that may look sensible to you as an outsider is likely to be a trap. It's happened to me twice and I am not playing that game again.
Here's some more on the subject:
http://www.ft.com/cms/s/0/27e90dea-c23b-11de-be3a-00144feab49a.html
http://www.ft.com/cms/s/0/27e90dea-c23b-11de-be3a-00144feab49a.html
