Expecting Higher Rates?
PST is an ETF that is UltraShort Lehman 7-10 yr Treasury ProShares. Basic thesis is that rates will go up, yields go up, which means bond values will go down. The inverse of down is that PST goes up, obviously.
Inflation is with us, and in a normal economic situation rates would have gone up a while ago. But rates are kept down because of the credit and housing mess this country is in. I am under the belief the ‘Paulson’ Bill, about to be passed, will give the Fed the ability to start raising rates.
The question that remain are…
1. When will rates start going up?
-Will the Fed want to see some housing data improvements, and GSEs improve before they raise rates or will data points not matter.
2. By how much will rates rise? (I’m not an economist so I will have to pay attention to what Kudlow says 
)
At the moment PST looks to want to consolidate a bit…
And this is confirmed by the 10yr treasury yield, as it wants to consolidate to maybe 39.
However, within the yield chart, notice the SMAs are now indicating an uptrend, and economic fundaments suggest the trend to continue… at least until the housing/credit mess is out of the way.
