I looked closer at this short treasuries play. I don’t like it, not yet. I agree it WAS a smart play when pro’s like Jim Rogers spotted it, which we know was more than a week ago.
Those ProShares short treasury ETF’s already moved up over 10% in the last week. On the charts it looks like they already erased much of the “bubble” and besides, it was the 3-month bills that big investors had driven yields way down on anyway. (ProShares at best lets you short the Lehman Brothers 7-10 Year U.S. Treasury Index. The other ProShares short treasury ETF is short the 20-year treasury index.)
I see inflation dropping to zero or going negative sometime during the next 6-9 months. I mean government inflation, and shadowstats inflation. Take a look at the global commodity indexes.
I see continued economic uncertainty. The dollar stays strong short-term into the recession. Investors keep buying treasuries for the short-term.
I think it at least as likely treasury yields on the 7 to 20 term bills will DROP, as we move deeper into this recession.
I think the time to short those treasuries is at the bottom of this recession, say in 6-9 months.
