We currently have no positions. Our expectation for global long term interest rates was that Japanese and German 10yr rates would settle between 0.25 - 0.50% and US 10yr rates would come down from 2.0%. In fact, what we have seen is that Japanese and German rates have begun to stabilize and that central bank quantitative easing has protected these markets from possible Greek instability. Conversely, US long rates are no longer supported by Fed QE and market expectation is for a Fed tightening to begin this summer. The result has been US 10yr rates are rising faster than Japanese and German 10yr rates. In sum, the market expects the QE nation yields to remain low while US rates rise in anticipation of future Fed tightening.

We expect global equity markets to remain strong. The Japanese Nikkei and German Dax are supported by QE and weaker currencies. In the US, we do not expect the Fed to tighten; however if they do it will be because the US economy is strong enough to absorb higher rates. To reiterate, we expect QE nations to have low long term interest rates while the US long rates trend higher. We do not expect the Fed to tighten and it seems currency markets agree as the US$ after rising to recent highs, has stabilizes rather than rising further. If it resumes its climb it will be an indication of expectations of Fed tightening.

Tuesday, February 17th, using the March futures, we sold our two half position longs in the US 10yr at their hard stops of 2.077% and 2.11%. We currently have no positions.

Modeled performance since inception, May 2012, net of all fees is +110.95%
In 2012 modeled performance (7 ½ mo.) net of all fees was +12.46% with a 10% Hurdle rate
In 2013, modeled performance net of all fees was +19.73% with a 10% Hurdle rate
In 2014, modeled performance net of all fees was +56.42% with a 10% Hurdle rate
In 2015, modeled performance net of all fees is +1.68% with a 8% Hurdle rate