Volatility/Treasury Unwind coming.

6 Mac 2022

Lots of buyers came in at the low 130's, people mistook these buyers for long volatility positions, volatility rose, people dumped equities for algo driven VOL strategies. I think we seen a spiral of bets unfold that don't represent the true market. Of course hedgies piled on to TLT, knowing full well that it is a great short term trade (and that adding uvxy calls to their reporting would be in bad taste). But that's just it, short term trade. Long term holders have added at the low 130's, the price they want. These adds aren't for profit, but for hedging government balance sheets and equity portfolios (huge whales). I expect the Fed to unwind more treasuries onto the market and for us to retest the lows around 130 which is where the Fed put on interest rates will feel comfortable for the rest of the year. The US treasury will yet again raise funds for whatever populist mid-term election strategy they have in mind, and for sure they need cash to send to Ukraine for kickbacks. Yes the DXY can handle a haircut, but no the bond market won't rally under these conditions as they are inflationary and bonds are a dead end for inflationary market.

tldr: possible more upside to squeeze enemy hedge funds and safely bet on volatility, but expect the trade to unwind over the next few months.

I'm not looking to make a play on treasuries, but instead long XLF and low p/e banks like GS

8 Mac 2022

Pesanan dibatalkan

with commodity crisis unfolding closed financial longs, at loss 20-30%. tlt seems to be unwinding but equities will still suffer.