Waiting for the mother of all shorting opportunities

Daniel Weston

Aimed Capital

I can’t see any reason to own inflation protected bonds in a portfolio myself. If inflation were a concern, which based on our inflation analysis it isn’t, we would not be buying inflation-protected bonds anyway. There are many better ways to put on this trade. Instead, one of them is by expressing our upside inflationary pressures by shorting Sovereign Government Debt. This could turn into the mother of all shorting opportunities over time and we are happy to wait for this opportunity to arise. The problem is, that inflationary pressures are nowhere to be seen, and the buyers of bonds, being mainly central banks, can continue to be buyers for a very long time to come, protecting their own interests if inflation starts to rise and likely cushioning any potential sell-off. History has shown that government intervention in markets usually cracks at some point and the market has its way of re-pricing risk.

Daniel Weston
Chief Investment Officer
Aimed Capital

Running the Aimed Global Alpha - Macro Hedge Fund. Aussie. Trader. Investor. Coder. Cricketer. Skier. Surfer. Flyer. www.aimedcapital.com


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