Sell Every Jump in 10 Year Yields

If you see this shit right here again, sell that b****:

Maybe some TBT Puts?

In the first week of June, long dated treasury yields spiked over 20bps, then rapidly declined back down 20bps.

I have a suspicion the Fed will not tolerate moves like this going forward. So the next time 10 year rises 20bps, I am going to go short when it plateaus. This represents a nice asymmetric bet. Either rates hangout there, or they retreat back — the Fed is not going to allow rates to rise across the yield curve unchecked. The Fed has already threatened yield curve control, thus treasuries should start trading a tight band naturally. We’ll pounce on any deviation.

Something else to ponder is the dollar. It also reversed a trend at around the same time as rates did. Do I get on this train?

How far will the dollar rally?

Also, what happened to the Fed’s balance sheet? Take a look at the Fed’s weekly “Total Assets Wednesday Level”:

The Fed barely grew its total assets in the first full week of June. Then its total assets dropped! I’m sure the Fed was still buying treasuries (at a slower pace for sure), but where did it shrink assets?

This calls for a closer inspection of the Fed’s balance sheet!