Another excellent post, thanks Russell - agree with everything you say and still see downside to TLT, albeit after a bounce from these levels.

Want to caution though that with TLT (or any other passive ETF for that matter) the short interest and other positioning metrics ideally need to look through to that of the underlying assets, that either form the baskets or are used by dealers to hedge - for TLT that's 20+year maturity treasuries and US Ultra Long bond futures... hard to get data on the former but for the latter CFTC data is available and shows a massive amount of short interest by speculators (CTAs and other funds).

Q is this something you have looked at and monitor also Russell?

Definitely seems retail short and buying the dip, though seems speculators may have woken up and now taking the other side - interestingly Ackman just announced he'd covered his 30yr bond short...

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What I was wondering is whether shorting HYG dominates long TLT.

If oil is down and TLT is up, there would be an unwind of the short TLT long HYG trade. HYG down.

If oil is up and TLT is down, HYG would still be down due to the oil shock, recession and worse financial conditions.

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Here are my thoughts about TLT. What do you think?


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"If we see a reduction in shares outstanding in TLT or a rise in short interest, a tactical cover may make sense."

Please assume I am a novice. I don't understand this statement. I thought a rise in short interest should be a good news for short-sellers. Why would you go for a tactical cover in this scenario?

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Hi Russell,

Are you any closer to start your own fund / ETF / investment club, so one can execute these ideas via your vehicle. Thanks looking forward to your affirmative reply.

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I took myself out of the Short TLT trade took it from 122 to 84.50 but finding it hard to get motivated to re-enter now even though I see the logic of rates getting above Fed Funds Rate.

Might have to let this pitch pass by.

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