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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35345  
Subject: Re: Bond ETFs Date: 6/29/2005 9:54 PM
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"I read a few days ago that their is a lot of short interest in bond ETFs, mainly TLT."

When the Feds raise interest rates as they are expected to do tomorrow, bond prices will fall. Hence, shorting a bond ETF is one way to play that very short term gain.

But bonds are funny right now because the feds keep raising short term rates, but people keep bidding up the prices of longer bonds. Hence, the rate increase does not seem to hang around long and the yield curve continues to flatten. This can't go on forever. So what is going to give? No one seems to know for sure. But I suspect that most are betting that eventually long term rates have to rise (ie the Fed wins), but do we know for sure? Doubtful. Its a risks.

And risks in bonds are not so common.
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