As war in parts of Europe loom so money flows to the safe heart of the financial world, the US bond market. But money, being as fickle as it is, may not stay there for long.
The FED will have to put up rates at some time as domestic inflation starts to be a bothersome worry. Add that to risk off external money flows there is a strong case for higher rates sooner.
I believe bonds will drop up till the FED monthly meeting end this month and thereafter probably suffer selling pressure as QE terminates. The big question then being: when will Yellen raise rates?
Question for me is if this is true then what strategy should I follow? I hope some of you will enter into discussion as this could be the trade of the decade. There is big money to be made.
So:
1)buy December options then sell after the FED announcement (it should disappoint)
2)buy TBT on a pull back then
3)always have a bond short on the books.The market will probably be caught by surprise when rates rise and will react decisively
