Shorting Global Bonds

Published on
1 August, 2018
Topic
Trading, Asia, Bonds
Duration
13 minutes
Asset class
Bonds/Rates/Credit

Shorting Global Bonds

Featuring Peter Boockvar

Peter Boockvar, chief investment officer at Bleakley Advisory Group and editor of The Boock Report, has a plan for betting against European and Japanese sovereign bonds. He presents the catalysts, and lays out the trade, in this interview with Real Vision’s Alex Rosenberg. Filmed on July 30, 2018.

Published on
1 August, 2018
Topic
Trading, Asia, Bonds
Duration
13 minutes
Asset class
Bonds/Rates/Credit
Rating
11
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Comments

  • AC

    Andrew C.

    2 8 2018 12:59

    1       0

    Improving yields in Europe and Japan: does this mean Banks should become more profitable? They might be a better way to play this trade idea.

  • MS

    Michael S.

    1 8 2018 18:11

    6       0

    This misses all the carry and roll costs, as usual. When you short a bond you're long cash. When a cash rate is negative (as it is in Europe), you can have a negative carry trade even when bond yields are low. In swaps land it's called pay/pay (your receive leg is negative, so you pay twice).

    I'm not saying this won't work, but it's not the case that you can just sit and wait and what's the worst that can happen with low yields. The worst that can happen is you get carried out. On BNDX, it was <53 at the end of 2016 with the German 10-yr at 17 bps and JGBs at 4 bps. Today German yields are 0.5% and Japan 12 bps, and even after the recent correction it's $54.50 and annualized at 2.2%.

  • PD

    Paul D.

    1 8 2018 14:00

    2       0

    Splendid timing!

  • KS

    Karen S.

    1 8 2018 13:06

    2       0

    US10 at 3%...nice