Perhaps the simplest trade is to follow the trend. Betting against bonds was key to AlphaSimplex Group netting a 33.5% gain this year in its mutual fund. And the firm’s statistical models suggest the momentum trade still has juice.
“If inflation numbers keep coming out like they are, they will have to keep fighting,” says Kathryn Kaminski, a portfolio manager at AlphaSimplex, referring to Fed officials. “The short-bonds trade still has some legs to go.”
This article was provided by Bloomberg News.