With all the Brexit news over the last week you may have seen the financial media commenting on the activity of the global bond market. Just as the market was chaotic for the week, so to were bonds. This was not just centered around the UK. Globally bond markets were just as volatile as their equity markets. So as an investor what does this mean, and what if you have limited access to, or just don't want to purchase (or sell) bonds in their direct form? In other words, what if you are looking for a trade in bonds, not an investment.
Lucky for you and I the large investment banks have noticed the need for individuals, funds, and other institutions to trade bond markets. Now, in general bond markets can be traded in their traditional form but on a large scale, liquidity may be an issue. Most of the time bond traders are filling orders where the other side has no interest in liquidating in a few days or weeks. These are typically long term holders that are positioning large investment groups for the long term.
If you are looking for a trade, or a more liquid ETF to participate in the bond markets, one consideration should be the iShares 20+ year treasury bond ETF
The basic premise of this ETF is that as bond prices go up (and rates go lower) so does the TLT. Now what if you think bond prices will head lower (higher rates). Well you certainly can short the TLT as there is always plenty of shares available, but what if you cannot short in your account. Maybe you have a cash only account?
The inverse to the TLT is the iShares Ultra Short 20+ year bond