From Market Folly:

Today, we are going to highlight Julian Robertson's steepener swap play. In layman's terms, he is shorting long-term US Treasuries. Taken from eFinancialNews, "Steepeners are a type of interest rate swap, where one party agrees to pay the other a fixed rate in exchange for a floating rate, which is derived from the difference between long and short term rates. Many of these products also use high leverage, where the difference between the two rates is multiplied by up to 50 times to produce a higher return."

Basically, Robertson has been buying puts on longer-term treasuries. He thinks rates could hit 7% easily and could go as high as 18%. We agree with him on this play...

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