I believe, the trade of the decade is shorting the US Treasury bond market. US Treasury bonds pay a fixed rate of interest every six months until they mature. They are issued in a term of 30 years.
US bonds are also seen as the most liquid safe havens in the world. This is particularly important to understand in the context of how people think about “safety”.
He's absolutely right. I'm not the only one to have seen that sharp sell off in U.S. treasuries last week. Note that there wasn't a commensurate sell-off in JGB's at the same time.... the Yen is getting a better safe-haven bid than the Dollar. That should scare some people.
Once there isn't anymore DV01 to squeeze out of the U.S. Treasury and Corporate bond markets the money will begin to flow out quickly. Money will flow into gold very quickly, as people will not care about the Basel III capital definitions. This happened in the 70's and it'll happen here as well.
Shorting Treasuries is one thing, it's the biggest market in the world. Where is that money going to flow.? It has to flow somewhere. Some will flow into the Euro (cover your shorts now boys), some more will flow into the Yen, yes the Yen, and a lot of it will flow into gold, oil and other commodities.
I would take his analysis one step further and short LQD, the corporate bond fund (40% invested in UST's btw), because that's a crowded trade as well.
Again, this week's T.I.C. report is a big deal. The Fed has begun printing through the use of normal repos. The AMB is expanding at 9.5% again and bank credit is expanding while excess reserves were drawn down slightly.