Bear Traps Report editor Larry McDonald appeared on CNBC’s Trading Nation this week, saying as bond yields take off racing again, prices now look very oversold.
“The one thing I’m watching right now is the 10-Year Yield on the U.S. Treasury,” McDonald said. “What’s interesting is that globally, even though the U.S. 10 year yield is much higher than in Japan and Germany, the global shortage of dollars has increased dramatically… they are less competitive to say Germany. This is putting dramatic selling pressure on the 10 year and starting to upset the market.”
McDonald said this is creating two big opportunities.
“We’re seeing tremendous capitulation in emerging markets and in some spots like Brazil,” he said. “On the Treasury side, you’re looking at a very oversold market between 3.1% and 3.15% we’re going to get a good opportunity to buy Treasuries… so you buy the TBT ETF.”
The ProShares UltraShort 20+ Year Treasury ETF (TBT) tries to reflect the daily performance that corresponds with twice (200%) the inverse (opposite) of the Barclays Capital U.S. 20+ Year Treasury Bond Index.
Click here to watch McDonald’s analysis on the bonds market:
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