With unemployment apparently peaking, we are becoming increasing alert for a drop in price in long term bonds. This morning Morgan Stanley outlined their interest rate expectations for 2010 and 2011: They see the 10 year Treasury moving to 4.5% by Summer 2010 and 5.5% by the end of 2010.
For this reason I believe the “TBT” represents a very good risk reward trade to benefit from the looming price decline in bonds.
Long TBT