TLT Short

22 Oca 2023

TLT is approaching a technical double top area as the Feb. 1st FOMC meeting looms. Fed futures are currently pricing in a 475-500 bps terminal rate, however some fed speakers over the days have indicated a desire to exceed 500 bps this year. Market thus far hasn't bought that narrative and expects the Fed will be forced to pivot later this year due to recessionary headwinds. This pivot hopium has resulted in a rally in TLT. However, if the Fed raises rates to 50bps in February with 2 more rate hikes to go after that, Fed futures should spike above 5%. This will bring TLT crashing down to the 90-100 level. Even if the Fed only raises 25bps with 2 more rate hikes to go, a hawkish stance consistent with their recent comments about continuing rate increases should eat away at the Fed pivot hopium rally and still result in a drop of TLT to the 100 level. EIther way I don't see TLT continuing past 110 in the near term and this opens up a good short oppotunity.