ETF: TBT’s Day Has Come

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May 25, 2009 9:10am NYSE:TBT

nextbigthingInvestors who have been patiently waiting in the Proshares UltraShort 20-year Treasury (TBT), an ETF which shorts the 20-treasury note, are finally reaping their rewards as the fund is up 17% since mid March. As investors start to worry about the increasing risks of inflation, credit downgrades, or even a US sovereign default, they are demanding higher yields on US debt. Higher yields mean lower prices, and a higher TBT, as the leveraged fund aims to return 200% the inverse of long dated treasuries.

Rates above 5% would mean a healthy return for the fund. But the macroeconomic fundamentals of the American economy would suggest a 20 year note closer to 10%, meaning the potential for upside is huge.

Full Story: http://seekingalpha.com/article/139424-tbt-s-day-has-come?source=yahoo



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