The thesis in one paragraph
Yields in the 10- to 30-year zone keep grinding higher, and bond prices in that zone keep falling. The Fed-hike trade grabs the headlines, but it's already priced. The durable pressure comes from the term premium — deficits, record Treasury supply, AI corporate borrowing, and a foreign buyer turned seller. We express the view with defined-risk options that expire past the fall catalysts, sized so that being wrong costs a lesson, not a portfolio.
The long end is repricing — and the headlines are reading the wrong chapter The 10-year Treasury trades near 4.96%, its highest level since October 2023. The 30-year sits at 5.35%, its highest since 2007. Thursday's 30-year auction cleared at 5.308%, up from 5.216% in August — the highest long-bond auction yield in a quarter century.
Our view: yields in the 10- to 30-year zone keep grinding higher, and bond prices in that zone keep falling. This note lays out why, then delivers a defined-risk options playbook to profit from the move or protect against it.
Five forces push long yields higher: a Fed flipping from cut to hike, an energy shock, record Treasury supply, $1.5 trillion-plus of AI corporate debt, and Japan selling Treasuries to defend the yen.
The 1880Q read: real yields — not inflation expectations — account for nearly all of the one-year rise. The market prices a higher cost of capital, not runaway inflation.
The curve tells us to be patient: the 2-year outran the 30-year over the past month. The Fed trade is mostly priced. Every trade here expires in December or January.
The playbook: a TLT bear put spread (core), outright TLT puts (tail), TNX/TYX yield calls (direct), and a protective collar for holders. Premium at risk: 1–2% of portfolio value per idea.
The 10th Man: core CPI sits at a five-year low, oil can reverse overnight, and the Treasury holds a buyback put. We define falsifiers up front.
For the full report, download the PDF below.
Live Loud! -Q