according to the COT reports "smart money" has been 49% short T-Bonds for the past 2 weeks (this week makes 3). also, rates are at historic lows.

ProFunds has a mutual fund that shorts the 30 year
T-Bonds - it is 25% leveraged.

what is your opinion about shorting 30 year treasury bonds in this environment?
-ja

Joe,

I agree with your general premise that there will probably be much more money made betting on higher interest rates rather than lower interest rates in the future. But in terms of timing, I haven’t shorted bonds yet. I certainly wouldn’t do it just because rates are lower than they have been in a very long period of time, anymore than I would short the stock market just because stocks were at historic highs.

Also, I haven’t found that whether or not the commercials are net long vs. net short to be particularly relevant in the bond market. I think that it is more relevant when they are at extreme net long and net short positions in relation to where they have been in the past. I would keep an eye on the Blees reports for information on that. When Blees gets to “100” that’s a possible buy signal. When Blees gets to “0,” that’s a possible sell signal.

Also, the 30-year bond contract, although still very active, is no longer the one to focus on. The government is phasing out 30-year bonds and the 10- year note is now the bellwether. It’s the one where you’re going to see the most commercial activity. And in the 10-year, the commercials are 53% net long with a Blees rating of 57.

If you think that bonds are a short at these levels, by all means do it. Just don’t do it because rates are low and the commercials are net short bond futures.

Larry