The 10yr-2yr Yield Curve is hinting to steepen
A hint sure is not a trend change. But a hint is a hint that is still in play. If the spread takes out the September high it would be time to pay attention to the potential for a trend change. Easy now; the word ‘potential’ is an important one.
The question now is whether the next real steepener is going to come from the September-October levels not seen since 2002 or from the extreme inversions of the 1970s.
When the steepener does come though, you’ll want to expect major changes in some form (not necessarily bearish or bullish, but in my opinion the potential for both with economic deceleration the main theme).
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When the time comes… what do you think about playing UBT? It is dropping hard, so maybe a blowoff in yields is happening now?
I had actually thought about trying to short TBT, but UBT would probably be easier. But for me I’d rather just buy bond funds (out beyond my current ‘cash equiv’ super short duration). Also considering buying bonds directly rather than through funds.
I will be happy to buy 30 year T-Bonds at >5%. 20 years are currently at 4.7%, 30 years 4.43% (Fidelity).
I’d consider TLT again, but I do like buying directly now, no fees, and no 3rd party concerns.
I laughed a few months ago at people calling 80-90 on TLT. Well, they sure were right.
80-90 on TLT is 4%+ on the 30yr, which was sure viable. Now at 4.4% it’s coming to rubber-meet-road time. Yields either blow out or go von Mises crack-up IMO.