TYX has had a good run since recommending the trade about 7 weeks ago. However, there are some tactical issues that make TMN think it might be a good point in time to pocket some right here. The advance in yields has been pretty furious and almost one way traffic, even politicians and central bankers have spotted it. Even worse, the markets are starting to show their dislike, too. In this case the example is taken from Germany's Bund auction, which is really the next closest asset class to US Bonds. In terms of general direction there is rarely much difference between the two.
Failed auctions are not something politicians in the US or Germany can tolerate, therefore, be sure, they will do their best to deliver a "reason" for buying this paper again. Display of power helps in such cases and it is pure coincidence of course that the American aircraft carrier 'George Washington' is headed for Korean waters anyway these days. Russia coming closer to the "western democracies" militarily also helps the case naturally. The Germans for their part have been beating the drum about haircuts which is surely short term bullish news for German Bunds.
TMN is absolutely certain that politicians/central bankers will deliver the next gaffe (thank you Mr Weber, you are full of surprises, NOT) that will send bond yields higher again but in the short term, possibly into early 2011, bonds could find some support and retrace part of the lost ground. TMN will remain focussed on the emergence of buying opportunities in TYX / selling opportunities in T-Bonds.