Author Topic: The inverted yield curve, visualized  (Read 744 times)

FireLane

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The inverted yield curve, visualized
« on: December 01, 2019, 05:20:31 PM »
I was looking at CD rates and saw this on Capital One. It's weird how nonchalantly they present it. You get a higher interest rate on a 1-year CD than a 3-year CD, and a higher rate on a 3-year than a 5!

For those of us who plan to FIRE in the near future, this ought to be a tipoff that recession is looming and we should be prepared. I certainly intend to beef up my cash holdings before my own FIRE date next year.

ysette9

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The inverted yield curve, visualized
« Reply #1 on: December 01, 2019, 05:39:19 PM »
What is your current asset allocation, out of curiosity? We are aiming for a 60/40 at FIRE which is pretty much tomorrow.

FireLane

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Re: The inverted yield curve, visualized
« Reply #2 on: December 02, 2019, 11:55:18 AM »
It's 80/20 - or it was. It's drifted a little, I have to rebalance this month.

I don't have any super-compelling technical argument for that allocation. I just put it into cFIREsim, and it shows a close to 100% success rate at the WR I want. I'm hoping to be retired for 40 or 50 years, and I figure I'll need a more stock-heavy portfolio than traditional retirees to make sure my stash grows and lasts that long.

ChpBstrd

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ysette9

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Re: The inverted yield curve, visualized
« Reply #4 on: December 02, 2019, 01:01:33 PM »
It's 80/20 - or it was. It's drifted a little, I have to rebalance this month.

I don't have any super-compelling technical argument for that allocation. I just put it into cFIREsim, and it shows a close to 100% success rate at the WR I want. I'm hoping to be retired for 40 or 50 years, and I figure I'll need a more stock-heavy portfolio than traditional retirees to make sure my stash grows and lasts that long.
We are at 60/40 and the plan is to slowly increase stocks after retirement to get back up to something like 90+%, so the portfolio can go the distance, like you say.

TomTX

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Re: The inverted yield curve, visualized
« Reply #5 on: December 02, 2019, 06:13:56 PM »
Here is my preferred visualization

https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield

Looks like the inversion has vanished and it's basically flat out to 7 years, where a mild upcurve starts.