Has the Bond Market Finally Turned?

Published on
January 10th, 2020
21 minutes

Playing the Crowd: Profiting from Recency Bias

Has the Bond Market Finally Turned?

Trade Ideas ·
Featuring Tony Greer

Published on: January 10th, 2020 • Duration: 21 minutes

Tony Greer, editor of The Morning Navigator, returns to Real Vision in 2020 with a bold bet on the bond market and reviews where he thinks yields are headed next. In this interview with Justine Underhill, Greer examines the current macro environment, highlights emerging inflationary signals, and discusses how traders should position for a bear-steepener in 2020. He also notes a specific ETF – $IEF – to play the thesis and lays out the trade’s risk/reward parameters. Filmed on January 8, 2019.



  • YO
    Yoshitaka O.
    10 March 2020 @ 00:08
    Yes turned against your favour, haha!
  • JB
    Jake B.
    18 February 2020 @ 04:22
    This is easy to say once he’s been proven wrong, but the depth of his analysis was just not good enough. Plucking data points and talking about what he feels they mean is not a data driven process... Hedgeye offer a much more thorough analysis on the underlying data and drew the opposite conclusion, which now appears to be correct.
  • RC
    Rich C.
    1 February 2020 @ 23:47
    Wow. Tony was proven to be completely wrong in a matter of two weeks. That might be a record.
    • DH
      Daniel H.
      3 February 2020 @ 00:51
      Not the first time this has happened to him
    • DB
      Doug B.
      13 February 2020 @ 22:34
      @RealVision, in the future, please only bring on guests who are always right.
  • SC
    Sean C.
    27 January 2020 @ 17:24
    Guess Raoul wins round one. Filmed Jan 8th and settled 110.93 that day. Next day trade was in the money but since this has aired it's been all the wrong way resulting in being stopped out Jan 24th. 'Yield curve is inverted, here comes the recession, and the media piled right onto that theme because all of them hate Donald Trump and they want a recession to occur during his presidency." No hiding TG's politics!
  • BT
    Brian T.
    27 January 2020 @ 11:38
    I like hearing multiple views on the market! I wouldn't put a lot of money on this idea, but I do like hearing the thought process, thank you TG. 1. Would it be fair to say that Inflation (more jobs, increased wages, increased spending) = bond market (TLT, IEF) struggles (= yields rise), while stocks and GLD thrives? 2. How does all the repo market contributions from FED affect this? - should cause inflation and dollar weakness, right? OR, does the global impact of 'everyone flooding into the dollar' cause dollar strength and bond market bust out? Thank you for any insights ! BT
    • BT
      Brian T.
      27 January 2020 @ 11:40
      btw, there are multiple {Brian T. } on RV !!
  • RA
    Ralph A.
    10 January 2020 @ 12:27
    Is this guy even paying attention to ANY of the data that doesn’t fit his narrative? The answer is no. He states that we have had one ISM manufacturing number that was 49.8 and that was it. We just had the 5th straight below 50 ISM and it is back down below 48 with the lowest number since June of 2009. He is not informed, do not trust his analysis but perhaps he can be helpful in understanding how careless investors think.
    • TG
      Tony G. | Contributor
      10 January 2020 @ 15:57
      Ralph - true - I should have mentioned the last ISM Manufacturing of 47.2. After that - Markit US Services PMI 52.8, ISM NON Manufacturing 55, Durable Goods orders -2.1%, and historic employment data. You'll trip over your beard waiting for the recession while I print money so take care.
    • DH
      Daniel H.
      11 January 2020 @ 00:58
      Careful with the snark. You have been wrong before.
    • RM
      Robert M.
      11 January 2020 @ 01:57
      Anytime I read or hear someone say they are printing money in the market tells me we are at a top.
    • WG
      Wade G.
      21 January 2020 @ 22:44
      Perhaps Ralph made some sweeping remarks that were unjustified or unnecessary. Still, I think Tony might have taken a breath before composing his snarky reply. While listening, I skipped backwards twice to see what I was missing during the segment, around 12:40ish, and concluded Tony's remarks were misleading, dramatically so, because only ISM was referenced. Beginning in August, ISM PMI's have printed below 50: 49.1, 47.8, 48.3, 48.1, & 47.2 for December. While not tanking to alarming levels in my view, ISM states that US Manufacturing is in contraction. The incorrect reference to data paired with a dismissive remark about recession risk caused me to stumble. Having said all that, I liked the video and up-voted it. I disliked Tony's response in this thread and down-voted it. I'm actually on the other side of Tony's trade, though small in size, but he gave me some things to think about. Good video, despite the misquoting of data.
  • HE
    Henry E.
    15 January 2020 @ 22:41
    Description says filmed on January 8, 2019. Should that be 2020?
  • BT
    Brian T.
    14 January 2020 @ 13:39
    Tony is a smart guy. I think his call is low probability though. Rates don't rise in an environment where inflation is accelerating and growth is flat or decelerating. This is the "inflation" Tony speaks of. What happens in this environment? Costs rise (both labor and input costs aka commodities). What is the corporate reaction to this? Unless revenue growth is accelerating, they must cut costs (people and capx) to maintain margins (and stock prices). Revenue growth is NOT currently accelerating. In this environment, it makes the most sense for investors to front-run the Fed policy response to rising costs and not much change in revenue - which historically has been rate cuts. The only way Tony is right is if the Fed engineers another 2016 event (which was really driven by the Chinese, not the Fed). If you believe growth is going to accelerate, fine, short bonds. I admit the equity market in the past 3 months has basically priced in this outcome - but the bond rate chart looks like a bear flag to me. Equities have a long history of getting things wrong relative to the bond market. Long T-bonds are a high probability bet based on current economic data IMHO. If the Fed keeps printing $100B a month, which they have done for 4 straight months, then MAYBE they manage to get growth to re-accelerate in 3-6 months. But it hasn't shown up much in the data yet. The more likely outcome is lower rates in 3-6 months and a lower stock market (which at minimum is grossly overbought). This is what makes a market. Perhaps after that rates will rise (from a lower level).
  • MF
    M F.
    14 January 2020 @ 05:43
    finally...a "Trade Idea" that is a trade idea...with a real entry price, target price, stop price, catalyst, risks, and timeframe...more of these, specific, punchy, real trade ideas, and fewer "investment conversations" on the Trade Idea section of RV. Thank You!
  • JP
    Jettana P.
    14 January 2020 @ 03:47
    Great insight providing a counter argument to the zero rates scenario. However as a trader myself, hearing that he put on a trade large enough to potentially blow up his account is a huge red flag for me.
  • JS
    Jim S.
    13 January 2020 @ 03:40
    I agree with Tony, there is probably upward pressure on yields given that the fed is still dumping liquidity on dealer banks in repo. With JP Morgan loading up on 130billion in USTs in the 4th qtr, a lot of new UST issuance, and Foreign CBs not buying US debt then his thesis could work. Any thoughts on actual timing (quarterly stress points?) or are you just working off of price action? Great Interview, always enjoy listening to you Tony.
    • JA
      John A.
      13 January 2020 @ 14:33
      Might be forgetting one important buyer...
    • JS
      Jim S.
      13 January 2020 @ 19:50
      US Gov?
  • NC
    Nick C.
    13 January 2020 @ 04:20
    I’m not sure how people get shoes on Real Vision. It seems like they are entrepreneurs who bring in their own interviewees. Regardless, when Tony Greer, Kyle Bass, and Raoul put out videos I know I need to watch that video. Really enjoy your conversations and look forward to more. Thanks
  • DB
    Doug B.
    11 January 2020 @ 09:53
    Wow, that's a high ratio of down votes. Agree or disagree with his position, I thought it was delivered in an intelligent, clear, succinct, and understandable manner. Efficient use of my time. I liked it even if I'm not sold on the trade.
    • bm
      brian m.
      12 January 2020 @ 16:31
      The down votes are a contrarian indicator
  • CL
    Chris L.
    11 January 2020 @ 23:55
    like I told Raoul back bbn in April and June, the Fed's easing into QE will cause bond yields to rise - no question. He unfollowed lol. in September, we see the Fed balance sheet blows out, yields reverse and the 10s/2s steepen. i wrote "The Truth of Yields, the Dollar and QE4" in Q2. This has been fun.
  • CL
    Chris L.
    11 January 2020 @ 23:41
    I agree with yields rising. only issue I see is he's 40 bps late
  • MC
    Matt C.
    11 January 2020 @ 19:55
    Drink every time he says “Right?”
  • GC
    George C.
    11 January 2020 @ 11:43
    Had me until he started ascribing motives to the media while ignoring the non-media indicia of economic slowdown and contraction risk. Then he came off as ideological, which, no matter one's ideology, perverts analysis. Made me suspect of his beliefs. Concerning bonds, he may be right or Raoul may be right. I have no idea. So, how does one position your portfolio in light of the uncertainty? That's the most interesting question in my mind.
  • ag
    anthony g.
    10 January 2020 @ 15:39
    This is a trade. He might be wrong when a recession arrives, but until that happens he might be right. The better quality view in IMHO, is stay long the long bond as it has a great return attached to it + interest + no nail biting along the way. No timing in other words. But ... it is a trade.
    • TG
      Tony G. | Contributor
      10 January 2020 @ 15:57
      it's just a trade. I'm not going to lose sleep if I am wrong. But it's accountable.
    • DH
      Daniel H.
      11 January 2020 @ 06:09
      As Alex Gurevich would say, shorting IEF has a negative carry.
  • DH
    Daniel H.
    11 January 2020 @ 01:29
    I thought the recession dominoes look like this: 1. Yield curve inverts. 2. Yield curve steepens. 3. Unemployment rises. The question is how much he can make while the yield curve is steepening. But it looks to me like the risk outweighs the reward.
    • RM
      Robert M.
      11 January 2020 @ 01:54
      If you got oil prices increasing, you would have all the elements in place. People seems to be overlooking the steepening is part of the timeline to recession versus being a good thing (since it is no longer inverted).
    • DH
      Daniel H.
      11 January 2020 @ 05:38
      Oil peaked at WTI $75 in 3Q18. That may be the oil peak that tipped us over. The economy is weak enough that we don't need $100 oil to have a problem. $60 may still be too high.
  • SC
    Sam C.
    10 January 2020 @ 22:09
    Tony, you are an inspiration in pitching skills.
    • RM
      Robert M.
      11 January 2020 @ 01:55
      He is good at pitching, but lost me on his argument on this one.
  • js
    john s.
    10 January 2020 @ 22:35
    Tony is wrong. We are heading for a double dip of the yield curve around Q2.
  • AP
    Adam P.
    10 January 2020 @ 22:01
    Great stuff, Tony. It's going to be interesting to see how all of this plays out regardless, but now we have the added kicker of seeing a TG vs. RP face-off. Loser has to shotgun a Mango White Claw. Entertainment value abounds!
  • JO
    Jonathan O.
    10 January 2020 @ 20:30
    The manufacturing ISM PMI has been below 50 since August and has had a lower print in each of the last 3 months.
  • RM
    Ryan M.
    10 January 2020 @ 07:24
    Seriously, I really love listening to Tony G on RV! His ability to filter vast amounts of information and turn it into real tradeable ideas is such a treat listen to. No superfluous meandering bullshit, just clear context and how to express in a trade. Love it! It's him and Michael Gayed - two of the best!
    • DF
      Diamantino F.
      10 January 2020 @ 10:14
      Totally agree I would add Mish
    • TG
      Tony G. | Contributor
      10 January 2020 @ 15:57
      Ryan - you are too kind. Thank you.
  • Nv
    Nick v.
    10 January 2020 @ 09:31
    Great interview. Good news, bad action = SELL