01Sep9:24 amEST

Yes, the Bond Market Can Crash

This is worth a re-post, especially in light of the summer rally in both stocks and Treasuries.
I am re-posting this not to "pile on" to the recent weakness in TLT (as rates go back up) but rather to reinforce my view that a bond market crash/swoon/substantial move lower from here as rates go higher is absolutely on the table if rates have a meltdown moment when the bond market realizes a soft landing is not going to happen and just how far behind the curve The Fed remains with inflation. 
At the moment, you will notice tons of seasoned bond market players and pundits alike who are bullish on TLT. Its is my contention that they are giving in to recency bias, with the prior forty year run in bonds now finished but they still believe rates simply cannot go higher.
I take the other side of that trade. 
Back on December 27th, 2021, I sent out the following video in an email to VIP Members inside Market Chess Subscription Services. In the VIP service, we focus on long-term investing plays and strategies, as well as the occasional special situation like the one I outlined below for Treasuries. 
At the time of this video, TLT was trading at $148.88.
 I have also included the text of the original email to VIP Members, below. 
Dear Valued Market Chess VIP Member,
Part of your service includes rare, special situations which I see in markets. 
Headed into 2022, compared to other years especially, not quite as many market players and pundits are taking higher rates seriously.
However, as I explain in the following video, with The Fed changing monetary policy gears, I expect the bond market to go through a major sea change itself next year, lending itself to an asymmetrical risk/reward trade setup.
I hope you find the video useful, and enjoy the remainder of the holiday season.
Founder and President of MarketChess.com

Off the Record, on the QT, a... The Market Moves to Its Own ...


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