The US$1 Billion Armageddon Trade Placed Against the United States Bond Market!

• Who is this entity/person who placed this bet against the US government? No one who has this kind of money and understands the US bond market would dare place such a large bet against the ruling power! Unless, of course, he is an insider and has been alerted to do so. Remember all the bets placed just before 9/11 against airlines and insurance companies? Could this be similar? We will know soon enough! If true, it means that the snakes are engineering a global financial collapse!
  –
  The $1 Billion Armageddon Trade Placed Against the United States Bond Market
  By Jack Barnes, Contributing Writer, Money Morning
  Someone dropped a bomb on the bond market Thursday – a $1  billion Armageddon trade betting the United States will lose its AAA credit  rating. In one moment, an invisible trader placed a single trade  that moved the most liquid debt market in the world.
  –
  The massive trade wasn’t placed in bonds themselves; it was  placed in the futures market. The trade was for block trades of 5,370 10-year Treasury  futures executed at 124-03 and 3,100 Treasury bond futures executed at 125-01.
  –
  The value of the trade was about $850 million dollars. In  simple terms, if that was a direct bond buy, no one would be talking about it. However, with the use of futures, you have to have margin capacity behind the trade. That means with a single push of a button someone was willing to commit more than $1 billion of real capital to this trade with expectations of a 10-to-1 return ratio.
  You only do this if you see an edge.
  –
  This means someone is confident that the United States is either going to default or is going to lose its AAA rating. That someone is willing to bet the proverbial farm that U.S. interest rates will be going  up.
  –
  I believe what happened is a debt-ceiling deal was done in  Washington and leaked to a major proprietary trader. Everyone knows the debt  negotiations in Washington have been an extreme game of brinksmanship between  political parties, but now someone knows how that game played out.
  –
  This had the hallmarks of one of the largest bond shops in  the world knowing something the rest of the market didn’t. The number of shops or even central banks that can take on  this level of market risk is extremely small. Some that come to mind are hedge  fund manager John Paulson, Bill Gross’s PIMCO, and the U.S. and Chinese central  banks.
  –
  Paulson already scored big – about $6 billion big – on a  similar trade years ago when he bet against subprime mortgages, the investments  that helped bring down Lehman Bros. and many other investors. Whoever was behind it wanted a trade on ASAP, and didn’t  care about the ripples they would cause.
  –
  You can see how this trade caused fear to be unleashed in  the market once it got out and the implications hit by looking at U.S.  Treasuries. People who were long 30-year Treasuries panicked as they saw the  huge short put on the futures market, and started to unwind their long  exposure.
  –
  What you, as investors, should do now is look at the bond  exchange-traded funds (ETFs) that provide a positive rate of return when U.S.  Treasuries drop in value. Yields are going up sooner rather than later, if the  person behind this Armageddon trade is correct.

end