Bond Update

US 30 Yr. (click to enlarge)

With the issuance of new paper and impending inflation and continued dollar debasement foreign debt holders are dumping US treasuries and rushing into commodities like Gold and Silver. The Long bonds started to fall even before this round of quantitative easing and now have fallen off the proverbial cliff. In the past the 30 year has been supported at the 200wk ma, but a break of that could lead to further pressure downwards. I think thats is what were going to see because Bernake has already hinted at QE3 (on 60 minutes). He also got Mr. all talk and no action to extend the Bush tax cuts which is another form of QE. If it were not for the problems in Europe the dollar index (euro heavily weighted) would have crashed and there would have been wide spread panic and gold would be above 2000, Oil at 150 etc.

20 Year Bond Fund

3-7 Yr Bond fund

There were rumors that Fed has been manipulating the bond market with the help of JPM asking them to short the short the shorter term paper and go long the long bond and they are getting money from the Fed to do that. I am no conspiracy theorist but I wouldn't put anything past these guys. It would be naive to think this type of stuff doesn't happen. Anyway, the way to play it is to either short the TLT or IEI or go long TBT or TBF, which I wrote about a few weeks ago. Since then the TBT is up over 20%. 

TBT is a long term (Secular Trend) play, with the theory that there will be a debt crisis in the US (11 trillion and rising), failing states (NY and California whose GDP is larger than most eurozone countries, heck Alabama's is larger than Ireland) given all this printing and ZERO job creation, rampant inflation and artificial low yields and eventually default of debt etc. This will take years to play out, and I hope it doesn't happen. But this is what the charts are telling me is going to happen. Charts don't lie, people do.