Yields on the 10-year Treasury note touched 1.9% on Wednesday following a solid auction as investors continue to scramble for safety from the Eurozone debt crisis.
The Treasury Department sold $21 billion in 10-year notes on Wednesday at a yield of 1.9%, the lowest level ever at auction, MarketWatch reports.
However, we point to bearish looking options flows in a a long Treasury exchange traded fund, TLT (iShares Barclays 20+ Year Treasury Bond), and this has been a familiar theme for several months, as bond naysayers have made the argument that current prices on the long bond are unsustainable and we are likely heading for an environment of lower long bond prices and thus higher yields.
Yet over the course of the past six months, TLT has marched steadily higher, with some signs of weakness along the way, only to be met with more buying. TLT has rallied over 24% since late July of 2011, and has traded as high as 30% off of last July levels. [Treasury ETFs Stumble Into 2012]
Currently, TLT is flirting with its 50 day moving average, a trend line that has provided strong support for several months as seen in the chart below.
Along with the put buying in TLT we have pointed out, call buyers were also present yesterday in TBT (ProShares UltraShort 20+ Year Treasury Bond), which reflects similar sentiments of those of the TLT put buyers.
TMV (Direxion Daily 20 Year Plus Treasury Bear 3X) is yet another leveraged “bear” play on long Treasuries. It remains to be seen how this plays out, as we have reported similar options activity for months on end now, and it has not exactly panned out for bond bears yet.
iShares Barclays 20+ Year Treasury Bond
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