If Treasurys (TLT) suffer some kind of dramatic mid-year meltdown on the back of unexpectedly high inflation and an unexpectedly hawkish Fed, then I am definitely going to be entitled to at least one "I told you so" post.
Now admittedly, I'm a sucker for stories about VaR shocks and that probably makes me overestimate the probability of one playing out this summer. As one reader put it a while back, "he just seems to have these swans on his mind - maybe it's a Freudian thing."
But that's okay. Markets generally underestimate the likelihood of tail events occurring, so I figure between my overestimation and market's underestimation, we might together come somewhere close to the truth when it comes to handicapping the Treasury black swan game.
Speaking of Treasurys, odds, and multi-sigma events, I encourage you to read, "The Treasury Black Swan: A Look At Market Mispricing… >