The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: Financial.Velociraptor on December 03, 2018, 05:07:37 PM
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The benchmark 10 year Treasury note closed today under 3.00% yield. The bull might still have legs!
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The benchmark 10 year Treasury note closed today under 3.00% yield. The bull might still have legs!
On the other hand, just saw this: https://finance.yahoo.com/news/treasury-yield-curve-just-inverted-sounding-alarm-recession-194921816.html (https://finance.yahoo.com/news/treasury-yield-curve-just-inverted-sounding-alarm-recession-194921816.html)
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Just click bait. Wait for 2yr yield greater than 10 yr yeild
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Just click bait. Wait for 2yr yield greater than 10 yr yeild
Yep.
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That 3yr / 5yr yield isn't that useful, but it does show that the 2yr / 10yr might be close to inverting. Plus the market believes the Fed is about to raise interest rates by +0.25%... but if the yield curve is almost inverted they might pause before doing that. I take the article to mean "watch out for 2yr / 10yr yield inversion and possible signs of a recession". But I don't think that's guaranteed.
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That clickbait article apparently spooked enough people that the DOW is off over 600 points in afternoon trading.
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On the other hand, just saw this: https://finance.yahoo.com/news/treasury-yield-curve-just-inverted-sounding-alarm-recession-194921816.html (https://finance.yahoo.com/news/treasury-yield-curve-just-inverted-sounding-alarm-recession-194921816.html)
"An inverted yield curve is a sign investors think the government is less likely to pay back debt it owes in two years than what it owes in a decade — or in this case, the government is less likely to pay in three years than it is in five."
Am I fundamentally misunderstanding this comment from the article, or is the author that clueless?
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That clickbait article apparently spooked enough people that the DOW is off over 600 points in afternoon trading.
I thought the selloff was happening because the trade deal with China wasn't taking shape.
https://www.washingtonpost.com/business/economy/i-am-a-tariff-man-trump-says-as-china-talks-show-signs-of-sputtering/2018/12/04/516425e4-f7e0-11e8-8c9a-860ce2a8148f_story.html?noredirect=on&utm_term=.ab47224bf5c5 (https://www.washingtonpost.com/business/economy/i-am-a-tariff-man-trump-says-as-china-talks-show-signs-of-sputtering/2018/12/04/516425e4-f7e0-11e8-8c9a-860ce2a8148f_story.html?noredirect=on&utm_term=.ab47224bf5c5)
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On the other hand, just saw this: https://finance.yahoo.com/news/treasury-yield-curve-just-inverted-sounding-alarm-recession-194921816.html (https://finance.yahoo.com/news/treasury-yield-curve-just-inverted-sounding-alarm-recession-194921816.html)
"An inverted yield curve is a sign investors think the government is less likely to pay back debt it owes in two years than what it owes in a decade — or in this case, the government is less likely to pay in three years than it is in five."
Am I fundamentally misunderstanding this comment from the article, or is the author that clueless?
Author is clearly a journalism major. Editor clearly did an undergrad in Management/Marketing. That is an enormously stupid assessment.
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That clickbait article apparently spooked enough people that the DOW is off over 600 points in afternoon trading.
I thought the selloff was happening because the trade deal with China wasn't taking shape.
https://www.washingtonpost.com/business/economy/i-am-a-tariff-man-trump-says-as-china-talks-show-signs-of-sputtering/2018/12/04/516425e4-f7e0-11e8-8c9a-860ce2a8148f_story.html?noredirect=on&utm_term=.ab47224bf5c5 (https://www.washingtonpost.com/business/economy/i-am-a-tariff-man-trump-says-as-china-talks-show-signs-of-sputtering/2018/12/04/516425e4-f7e0-11e8-8c9a-860ce2a8148f_story.html?noredirect=on&utm_term=.ab47224bf5c5)
Al the dumb people who invested on nothing but a Tweet Monday are univesting today because of a different tweet
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On the other hand, just saw this: https://finance.yahoo.com/news/treasury-yield-curve-just-inverted-sounding-alarm-recession-194921816.html (https://finance.yahoo.com/news/treasury-yield-curve-just-inverted-sounding-alarm-recession-194921816.html)
"An inverted yield curve is a sign investors think the government is less likely to pay back debt it owes in two years than what it owes in a decade — or in this case, the government is less likely to pay in three years than it is in five."
Am I fundamentally misunderstanding this comment from the article, or is the author that clueless?
A higher yield indicates higher risk so in this context it would mean short term is more risky than long term debt.
However who knows what is going on in the mind of the collective market that is driving yield fluctuations.
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On the other hand, just saw this: https://finance.yahoo.com/news/treasury-yield-curve-just-inverted-sounding-alarm-recession-194921816.html (https://finance.yahoo.com/news/treasury-yield-curve-just-inverted-sounding-alarm-recession-194921816.html)
"An inverted yield curve is a sign investors think the government is less likely to pay back debt it owes in two years than what it owes in a decade — or in this case, the government is less likely to pay in three years than it is in five."
Am I fundamentally misunderstanding this comment from the article, or is the author that clueless?
A higher yield indicates higher risk so in this context it would mean short term is more risky than long term debt.
However who knows what is going on in the mind of the collective market that is driving yield fluctuations.
Agreed that higher yield indicates higher risk, but the risk has absolutely nothing to do with the government not paying.
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On the other hand, just saw this: https://finance.yahoo.com/news/treasury-yield-curve-just-inverted-sounding-alarm-recession-194921816.html (https://finance.yahoo.com/news/treasury-yield-curve-just-inverted-sounding-alarm-recession-194921816.html)
"An inverted yield curve is a sign investors think the government is less likely to pay back debt it owes in two years than what it owes in a decade — or in this case, the government is less likely to pay in three years than it is in five."
Am I fundamentally misunderstanding this comment from the article, or is the author that clueless?
The fed is rolling billions off of it's balance sheet every month. Even if they don't hike rates in the traditional sense, isn't QT kind of like hiking every month, in terms of liquidity?
I wonder if the long end would yield so little if they put a pause on the balance sheet roll off, or if they rolled off some of the longer dated assets, instead. Wouldn't the yield curve tend to steepen simply as a result of doing either?
It seems the fed could influence the yield curve into whatever shape they want to. Maybe they are?
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The 3/5 spread is upright again by 1 bp.
https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
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On the other hand, just saw this: https://finance.yahoo.com/news/treasury-yield-curve-just-inverted-sounding-alarm-recession-194921816.html (https://finance.yahoo.com/news/treasury-yield-curve-just-inverted-sounding-alarm-recession-194921816.html)
"An inverted yield curve is a sign investors think the government is less likely to pay back debt it owes in two years than what it owes in a decade — or in this case, the government is less likely to pay in three years than it is in five."
Am I fundamentally misunderstanding this comment from the article, or is the author that clueless?
Author is clearly a journalism major. Editor clearly did an undergrad in Management/Marketing. That is an enormously stupid assessment.
Indeed. The inversion more likely reflects a belief that the Fed will need to cut short term rates in the not so distant future. The ten year yield just reflects expectations about short term yields at points in the future.