Taking TBT Long Off the Table

February 24h I posted, TLT / TBT Spec Position which was a short TLT (pullback) or long TBT (2x short TLT) long scalp position.

From the linked post above...

"I still expect a very short term TLT pullback as I have maintained since yesterday, this is very short term. That should loosen up downside pressure on the market during any such move. I think it is a tradable move for those who are very nimble, but rather than using any of the averages, I chose TBT, 2x leveraged short 20 year bonds, or 2x short TLT, the reason being is it has the 1 min positive divergence that confirms TLT's 1 min negative, the averages don't have positive divergences and I don't like trading something that isn't showing an edge. Again, this would be a quick trade/scalp and speculative..."

The position (TBT long) is at a 4.5 - 5% gain since posted remember it was always meant to be a short term scalp, although nothing precludes you from using more leverage than TBT's 2x inverse.

Since the post,

 This is the TBT (2x short TLT-20+ year bond fund) which was the trade idea...

Or TLT pullback (short), although I didn't think this had enough leverage on its own.

I will cover treasuries more extensively, but the divergences seen on the 24th that led to this call I suspect were entirely over the  Actavis offering which sold $21 billion of almost-junk 'BBB-' rated debt (at a minsicule yield of only 3.5%) in the 2nd largest bond issuance ever  The issue was oversubscribed 4.5x (around $90bn in the order book)  which means for every $1 offered, there was $4.5 in bids. This was a ten-part offering varying from 18-month floaters to 30Y fixeds and I suspect has been behind the recent havoc in the treasury market, now that it's over, I suspect things will be getting back to normal.

Remember the original idea linked above called this a quick trade or a "Scalp", so even a +4.5% gain on 2x leverage is not bad considering.

I've seen a few things pointed out last night, especially in the longer end of the curve that I suspect will see improvement, and ironically as everything is somehow connected to everything else, the Actavis issue likely had some role in yesterday's market ramp with Treasuries down and yields up.