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So much talk has been made about how the 10 year will shatter the 3% mark and march on upward, the forecast by "experts" was 3.25% by Dec 2018, yet we see that the 10YT is struggling to hold on to even 2.85 despite inflation at 2.2 and signs that it may rise.
Is this a ominous warning that equity market sentiment is shifting to overall bearish or is this a temporary anomaly before rates shoot up again? It seems like a long shot that given current market uncertainty long yields will rise that sharply in the next 6 months.
My thoughts are that there is some kind of attitude shift, confidence is waning and it seems to be the very beginning of a flight to safety by institutional investors. And of course commander in chief is tweeting contradictory signals on economic policy each day which does not help.
10-2 spread in Jan 2018: 0.54
10-2 spread as of now: 0.33
So much talk has been made about how the 10 year will shatter the 3% mark and march on upward, the forecast by "experts" was 3.25% by Dec 2018, yet we see that the 10YT is struggling to hold on to even 2.85 despite inflation at 2.2 and signs that it may rise.
Is this a ominous warning that equity market sentiment is shifting to overall bearish or is this a temporary anomaly before rates shoot up again? It seems like a long shot that given current market uncertainty long yields will rise that sharply in the next 6 months.
My thoughts are that there is some kind of attitude shift, confidence is waning and it seems to be the very beginning of a flight to safety by institutional investors. And of course commander in chief is tweeting contradictory signals on economic policy each day which does not help.
10-2 spread in Jan 2018: 0.54
10-2 spread as of now: 0.33
as i said so many times here , the forecasted gdp numbers just don't add up . they kept forecasting this gdp growth which just does not make sense. so now they just reduced the gdp numbers down , gee what a surprise .
when you looked at the savings rate which fell from 6 to 2% and credit card debt and subtracted that from gdp it appears to forecast about 1.50% growth . not 3 to 4% .
think about it , after trillions of dollars were injected in to the economy through all these years of the QE'S and fed interaction , if 1.50% gdp growth or in that area is this best we can do ,bond rates are way over where they should be already .
if the market and economy stumbles my money is on TLT doing very well
Last edited by mathjak107; 06-28-2018 at 11:01 AM..
robert kessler was on the consuelo mack show .very interesting perspective on rates . despite what we all think from the data the gov't puts out robert says ,every time the savings rate fell to 2.40% we went in to a recession in short order and that is where we stand today . mostly because consumer spending is 70% of our gdp
Bond yields will go lower. Our economy is a sham. People are still broke, can't afford health care or education. And our "brilliant" leaders gave away a trillion dollars so companies can buy back stocks and pay out dividends, which does not spur economic growth. The rich get richer, and poor get poorer, more so now than ever. Not to get political, but his happens every time the GOP runs things. You'd think people would learn. But we have become a country of morons.
there is only .65% or so difference between a 2 year and a 30 year treasury . there should be at lease 1% difference but it is not . the longer term bond market is not rising like it should with the shorter term rates .
perhaps the long term bond market is a lot smarter and sees trouble on the horizon .
prior to 2008 the fed was raising short term rates while the bond markets actually bid longer rates lower .we had the famous inverted yield curve where short term rates ended up higher than long term rates .
in the end the longer term bond market was correct in their perception .
the fed's increasing short term rates is because of the fed's futire perception that inflation will rise so they try to stop it .
bonds hate inflation and the longer you go out the more investors want higher rates .
but that is not what is happening now. compared to how much the fed raised short term rates longer term rates moved up but hardly in proportion . so the yield curve is flattening because bond investors do not feel this inflation and growth will materialize.if the 30 year rates fall enough we will have an inverted yield curve and that was always predictive of a recession looming
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