End of 2022 yield on the 10-year Treasury (credit, market, buying)
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Which ticker do you guys use for the 10-year? How come that's up but the 20-year is down?
The longer term bond markets thinks we are headed for a tumble and recession and sees rates actually reversing course …..that is what the 30 year at just 2% or so in a 7% environment is saying
What I don't get is, how come financials are plummeting as yields are rising. Aren't they usually correlated?
Financial companies borrow at short-term rates and earn income based on longer-term rates. So their business is the spread between short-term rates and longer-term rates. Of course a financial company can also benefit from volume.
Now most any investor can get 50% margin at short-term rates currently at about 1.6%. Or most any investor, with $100000 or more, can get "portfolio margin" at up to 90% margin but everything stays in the account. So what could the average investor do with funds loaned at 1.6% ? Well, okay, it is possible to be both leveraged and hedged.
Or invest in a mortgage-reit and let them do the leveraging. Or invest in a TIP closed-end-fund and let them to the leveraging.
If stocks tumble and there is a flight to safety there is a good chance we can have an inverted yield curve with bond rates falling and the bond market and fed at odds .
The fed may not want that but the worlds investors carry far more weight then poppa fed does.
Bonds trade like stocks on fear ,greed and perception…the longer the bonds go out the greater the effect
If the world’s investors bid those bond rates down in a flight to safety that curve will invert with our without the fed.
Incorrect.
The Fed has the tools to fight such a hypothetical inversion, should should the Fed decide to do so. They've said they won't allow it - the only question is will they honor their promise?
Quote:
Originally Posted by mathjak107
If stocks tumble and there is a flight to safety there is a good chance we can have an inverted yield curve with bond rates falling and the bond market and fed at odds .
The fed may not want that but the worlds investors carry far more weight then poppa fed does.
Incorrect.
The Fed has the tools to fight such a hypothetical inversion, should should the Fed decide to do so. They've said they won't allow it - the only question is will they honor their promise?
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