Market Choking on Debt: Time to Buy TBT?

It seems that mountain of Obama spending might cause interest rates to soar judging by what happened today.

Stocks turned lower Wednesday afternoon, sending major indexes down about 1 percent, after trading mixed earlier. Prices for the benchmark 10-year Treasury note slumped, driving its yield up to 3.66 percent from 3.55 percent late Tuesday.

The drop in bond prices followed an auction of $35 billion in five-year notes, part of the $101 billion in debt the government is issuing this week. Even though the auction itself was strong, traders said investors are speculating that demand could weaken as the government issues massive amounts of debt to fund its financial and economic rescue programs.

So I was looking into a hedge against interest rates jumping higher and UltraShort 20+ Year Treasury ProShares (TBT) might really fit the bill. It is a 2x inverse of the daily performance of the Lehman Brothers 20+ Year U.S. Treasury index. So it should go up as interest rates rise and bond prices drop.

I also think oil might be the other hedge since higher debt levels hurt the value of the dollar as well. You can see oil at multi-month highs of +$63 even though demand is down and supplies seem to be rising. We might see a further spike in oil as people rotate out of US debt to find a safer haven. I guess the bills for Obamanomics and Health Insurance for everyone might come due faster then the White House thinks.