[cleaveland]

Jack Barnes: Someone dropped a bomb on the bond market Thursday – a $1 billion Armageddon trade betting the UnitedStates will lose its AAA credit rating.
In one moment, an invisible trader placed a single trade that moved the most liquid debt market in the world.
The massive trade wasn’t placed in bonds themselves; it was placed in the futures market.
The trade was for block trades of 5,370 10-year Treasury futures executed at 124-03 and 3,100 Treasury bond futures executed at 125-01.
The value of the trade was about $850 million dollars. In simple terms, if that was a direct bond buy, no one would be talking about it.
However, with the use of futures, you have to have margin capacity behind the trade. That means with a single push of a button someone was willing to commit more than $1 billion of real capital to this trade with expectations of a 10-to-1 return ratio.
You only do this if you see an edge.
This means someone is confident that the United States is either going to default or is going to lose its AAA rating. That someone is willing to bet the proverbial farm that U.S. interest rates will be going up.

http://etfdailynews.com/2011/07/25/i...united-states/

[jjgold]

interesting
he must know soemthing

[RubberKettle]

USA will likely lose the AAA rating without defaulting.

[LostBankroll]

Fishhead dropped 1 Mil in the stock market?

[excel]

damn 1 billion to win 10... probably china

[ryanjep]

insane amount of money but if they see something then maybe others should follow the steam

[lemart5]

It was my firm that placed those.

[doublej95]

It was my firm that placed those.

You don't have a pot to piss in.

[King Mayan]

You don't have a pot to piss in.

[jjgold]

market will drop 1000 points if this happens

[Snowball]

probably just a hedge, insurance..

[obamaismyuncle]

probably just a hedge, insurance..

[ACoochy]

damn 1 billion to win 10... probably china

China has to make up for its continually depreciating 'assets' in US currency somehow...

[jarvol]

I think the USA will be downgraded from AAA but won't default. However I find it hard to believe that France, Germany, GB, Canada, Australia, and Switzerland can still be AAA and not the US.

[excel]

Looks like someone is hedging their bet.

[Gee]

It is not that uncommon and not a bad bet in a time like this. Even if the US raises its debt ceiling, I suspect he will still make something. We are not going to see a miraculous recovery and the US will have tough times ahead. The problem will be if the dollar does rally short term, then he's faced with a very difficult decision.

Most of you might remember when George Soros did this in 1992 with the English pound.

He bet on the value of the pound dropping and netted about 1 billion in a day on the trade and 2 billion overall. This was a 10 billion dollar position.

[Extra Innings]

It was my firm that placed those.

[I/O]

I think Soros has done this a number of times in markets of a much smaller scale. He also, imo, knew he was hedged into coming out ahead either way. This play wasn't as solid a bet, even if default occurs. This is much more of a gamble.

[bettilimbroke999]

It was my firm that placed those.

Never knew a lemonade stand could be so profitable

[pico]

without masking the trade, i would say china or japan. hedge funds are better at executing those trades

[trytrytry]

hedge they locked in a free 3-4 million or so profit..thats it..

[Tsonga]

very interesting...any chance this goes as a prop bet on sbr?

[NYSportsGuy210]

I think George Soros had something to do with this bet.

[milwaukee mike]

interest rates CAN'T go up when you have huge deficits/debt like this.
japan has kept interest rates at around zero for more than a decade now, and our economy has completely mirrored theirs about 5-10 years later.
what did japan do? run up a bunch of debt to make bankers rich, ship their jobs to china, create a huge real estate bubble with low interest rates, and watch it all crash.
sound familiar?

if long-term interest rates go to 7%, and the u.s. owes $15 trillion, that is over $1 trillion/year in interest. the federal government, other than social security/medicare, only collects around $1 trillion/year in taxes.
so the numbers don't even come close to working unless you lower interest rates even further.

[chemicalbrother]

market will drop 1000 points if this happens

probably more like 6,000.

[mikejamm]

Who gives a shit! Let the fuk'in market crash! It will serve all those greedy bastards right for all the bullshit speculation futures they put on oil and cause gas prices to go way the fuk up for no reason! I'm glad I got the fuk out of the market and bought real estate, you'll never lose money on land! Fuk wall street and those corporate assholes, they're exactly the reason why this country is as fuk'ed as it is! I can't wait for the day China pulls all their fuk'in money outta here and those greedy corporate shitheads take a flying leap from their top floor offices on to the fuk'in pavement!

[akphidelt]

Who gives a shit! Let the fuk'in market crash! It will serve all those greedy bastards right for all the bullshit speculation futures they put on oil and cause gas prices to go way the fuk up for no reason! I'm glad I got the fuk out of the market and bought real estate, you'll never lose money on land! Fuk wall street and those corporate assholes, they're exactly the reason why this country is as fuk'ed as it is! I can't wait for the day China pulls all their fuk'in money outta here and those greedy corporate shitheads take a flying leap from their top floor offices on to the fuk'in pavement!

What? How can China "pull" their money out of here? Where are they going to pull it to?

[nobull]

lol what a sucker !! he just lost 1 Billion .......................... moody's just annouced the U.S. will not be downgraded

[aceking]

I think George Soros had something to do with this bet.

he's retired .

might be john paulson .

http://en.wikipedia.org/wiki/John_Paulson

[mikejamm]

What? How can China "pull" their money out of here? Where are they going to pull it to?

Lots of places, developing 3rd world countries with cheap labor, their own infrastructure, ie.. high speed rail, real estate construction, technology. Or for the simple reason, to wait for our economy to completely crash, and swoop in and buy up everything dirt cheep. The Chinese are not fuk'in dumb, they will own the fuk'in USA by the turn of the century if not sooner, thanks to political idiots who sold us down the river because of their ignorantly stupid ideology. So thanks again Reagan, Bush dumb asses 1 & 2, Tea Party fukheads, and the current Republicans. Mission Accomplished!

[alling]

High unemployment + large debt + weak housing market = weak fundamentals = major crash coming

[alling]

lol what a sucker !! he just lost 1 Billion .......................... moody's just annouced the U.S. will not be downgraded

http://thehill.com/blogs/on-the-mone...ons-aaa-rating

[nasaki]

http://thehill.com/blogs/on-the-mone...ons-aaa-rating

the hill blogs LMFAO !!!! that con rag newspaper


" previous reports indicating that Congress would need to make $4 trillion in deficit cuts over 10 years to retain a triple-A rating were not accurate "



http://finance.yahoo.com/news/Moodys...&asset=&ccode=

[Emily_Haines]

http://finance.yahoo.com/news/Moodys...&asset=&ccode=

You think this thing aint fixed. We run up debt to the point where it can never be paid back. Borrow more on top of that and Moodys says everything is OK business as usual.

[unfukkinreal]

Parking large sums in treasury is not uncommon in today's market. And the futures are now being used because the treasury yield is so low.