The yield on 10-year note has fallen from 3.85% to 3.55% as fear has ramped up (check out VIX). I think now it is time to bet the other way. Morgan Stanley believes that by the end of 2010, yields on 10-year note will rise to 4.5% and I fully agree.
Attached is a daily chart of TLT which tracks US 20-year bond performance. It is now almost at the resistance. I think it will start stalling out here. TBT is 2x inverse of TLT. I like to play long TBT with the following calendar spread:- Buy to open March $47 call
- Sell to open March $50 call
The call spread is going for $0.88 as I write this. I should also mention that approx $80 billion worth of short and long term Treasuries are set to be auctioned next week and any one of them could have the potential to move TBT higher.
Good luck!
