Short the Big Short

Monday, 23 August 2021

For many, many years, the widowmaker trade of global markets was to short Japanese bonds. JGBs were considered vulnerable to a selloff for decades owing to massive budget deficits and notions of rebounding inflation. It never happened.

There were occasional wins. But overall it was a one-way bet to nowhere:

The same dynamics are emerging around US treasuries and for similar reasons:

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.