Trading, like the seasons, the moon and life, is about cycles. As students of history, traders are always trying to understand the slice of time they are living right now. A page in a history book may cover several years with perfect clarity. Experiencing those years can be far more frustrating. A secular arc is far more important to recognize.

Webster defines "secular" as "occurring once in an age." The secular bull market in bonds began in the early 1980's. As the great Sydney Homer penned extra editions of "A History of Interest Rates" to cover the landmark prices, bonds were being shunned everywhere. Leon Cooperman is attributed with coining the phrase "certificates of confiscation." To his credit, he actually believed they were a good investment. Through multiple CYCLES the SECULAR bull raged on.

We believe that we are at the other end of that arc. Biblical amounts of liquidity and zero financing rates have created an ability to "play" in the term structure. This activity should not be confused with an investment or theme. Owning these instruments makes little, if any, economic sense. It does not mean that any teenager with a trading account and a 5 minute bar chart can short them, however. Secular turns are culturally resisted by definition. I recall morning squawks at Dean Witter Govies that centered around, "Somebody tell the kid in Chicago, we only  sell the stuff." And yet, expansions, contractions, bubbles, crashes, deficits and surpluses we are on the floor.

A mentor said to me a few months ago, "If i can't be short at zero, it's ceased to matter." Channeling Bill Clinton, "I feel your pain." Secular trends to glacially shift, however. Welcome to Treasury Bond global warming.

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