The Real Bubble Trade – US and EU Interest Rates
Are interest rates about to break out? Is the Bull Market in Bonds over? And is this the time to hedge your interest rate risk?
The last time I wrote about one of the biggest bubbles out there (record low interest rates), it was June 30, 2017, and I mentioned that I invest part of my assets in ETF’s that increase in value when interest rates (US 10y, EU 10/20y) increase. In my view, now is the time, (if you haven’t done already) to lock in your interest rates for the long term or hedge your interest rate risk. For example, if you have a variable interest rate mortgage (why at record lows, only way is up??) it could be wise to lock the rates in for the next 15 years.
One year from now, max 2 years, I will be buying a new house. To hedge some of the risk that I have if interest rates increase between now and Q2 2019, I invest some of my money in the following funds:
Here’s the Monthly Chart of US 10 year interest rates.
June 2016 marked the High of this Bull Market in Bonds, so far, with a record low yield of 1.34%. A break and close above 2.6% and then a successful retest of 2.6% is considered bullish for rates, bearish for bonds.
I will add to my ETF’s when the retest is successful > 2.6%.
German 2Y and 10Y Rates – Ready To Break Out?
2y yield is at minus 0.6%, so in my view, if you have time and patience: the only way is up.
Short Sovereign Bonds / Long Interest Rates
Start JAN 3 – Investment 0.01 BTC ($150), Withdrawals: $ 0.006 BTC after fees ($90, after fees) since 8 days. 0.04 BTC to go to break even.
JAN 12 – I have made a request for the 3rd withdrawal limit of 0.0035 BTC, bringing my investment close to break even: a free lunch for the days to come?
Total Portfolio Strategy 2018
If you want to read more about my Total Investment Strategy, then please read this update first: 2017 Performance and Total Portfolio.
Or read my latest update on the US Markets: Dow Jones Industrial, Party Like It’s 1987!
This is what I will do over the next couple of weeks/months:
- I will add monthly to a mutual fund (worldwide stocks), as I expect stocks to skyrocket into the year 2032, peak of flight to private assets;
- I will add 2% of my assets to buy put spreads AEX Dec 2018, as a hedge for my equity exposure, medium term trade (12-24 months, 2018-2019);
- I will add 7% of my assets to to my 2018-2019 eToro hedge strategy: – Hedge US Stock Market for a 20%-40% crash
- I will contribute small amounts to interesting ICO’s and tokens that pay out a periodic cash flow;
- I decreased my crypto exposure from 20% of total assets to 4% of total assets;
- I will add to my short sovereign bond strategy (rising interest rates) when rates come down a bit into 2018 or if they break key resistance to the upside.
Crypto Rating Desk and our ICO Portfolio of 100
ps. I started a new project, for and by my international students.
We analyze upcoming ICO’s and when we see a project that we like, we contribute. Our latest contribution is LHCrypto, a token that pays out a monthly cash flow, has a working business model and is active in a growth market.
We now have 15 contributions, and our goal is to build a portfolio of 100 tokens that generates a periodic cash flow (Portfolio of 100).
Feel free to follow our ideas: CryptoRatingDesk.com
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