Thursday, April 21, 2011

Jim Rogers Warns on Treasury Bonds

Rogers tells Reuters:
I just think at some point along the line, people are going to realise it's absurd to lend money to the United States government for 30 years in U.S. dollars at 3 or 4 or 5 or 6 percent interest.

I mean the market is just going to give up. Once (the Fed) ... stops buying bonds I'm not sure who's left to buy bonds at that point.
But Rogers also said:
If the bond goes up another 3 or 4 points, I for one am going to sell it short.

I'm really scratching my head on this one. Rogers has admitted he is a terrible short-term trader and, yet, he is going to wait  before he puts on a bond short position. The Chinese by indicating that they are going to allow the yuan to float higher against the dollar are signalling that they are going to either stop, or be buying a lot fewer, Treasury securities. This is no time to be picky about picking an entry positon for a  short in Treasury bonds. The bonds could breakdown at any time.

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