Another high-profile investor is readying a short bet against U.S. Treasury bonds if prices continue to rise.
Noted investor Jim Rogers on Thursday said he plans to sell short Treasury bonds if their prices keep climbing. An investor who shorts bonds profits when their prices decline and yields rise.
There is a growing chorus that the multi-decade bull rally in Treasury bonds is coming to an end on worries over the huge debt burden.
Earlier this month, news broke that Bill Gross had initiated a short position in U.S. government debt in PIMCO Total Return Fund. Separately, PIMCO has filed for an exchange traded fund (ETF) version of Total Return Fund.
“I just think at some point along the line, people are going to realize it’s absurd to lend money to the United States government for 30 years in U.S. dollars at 3 or 4 or 5 or 6 percent interest,” Rogers said, according to Reuters. “I mean the market is just going to give up. Once (the Fed) … stops buying bonds I’m not sure who’s left to buy bonds at that point.”
The iShares Barclays 20+ Year Treasury Bond Fund (NYSEArca: TLT) has traded higher this week despite Standard & Poor’s downgrade of its U.S. credit outlook.
S&P downgraded the United States long term credit outlook, taking it from stable to poor, the first time in history. The last time that the United States was looking at a negative rating was in the 1990s, which was averted , says Wall Street Cheat Sheet.
ETFs that profit from rising Treasury yields and lower bond prices include:
- ProShares UltraShort 20+ Year Treasury (NYSEArca: TBT)
- ProShares Short 20+ Year Treasury (NYSEArca: TBF)
- ProShares UltraShort 3-7 Year Treasury ETF (NYSEArca: TBZ)
- ProShares Short 7-10 Year Treasury ETF (NYSEArca: TBX)
- Direxion Daily 7-10 Year Treasury Bear 1x Shares (NSYEArca: TYNS)
- Direxion Daily 20 Year Plus Treasury Bear 1x Shares (NYSEArca: TYBS)
- Direxion Daily 7-10 Year Treasury Bear 3x Shares (NYSEArca: TYO)
- Direxion Daily 20 Year Plus Treasury Bear 3x Shares (NYSEArca: TMV)
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.