Posted on 03/02/2020 5:25:59 AM PST by zeestephen
So Goobermint should REFI all of that outstanding debt.
Anything the US owes, over 3% should get shiite-canned and refied.
Am I wrong?
Do you mind pointing me to that 1.3%.
Thanks for the help.
“ It is first important to understand what is negative on the 10 yr treasury. The coupon rate is not negative. The yield is negative.”
Unlike a handful of EU countries (Germany being one) neither the yield nor the coupon on the 10 treasury is negative. Nor is it negative on any other US debt.
DOW spiked higher this morning but just crossed into the red.
If I am a foreign investor and I expect the currency in my own country to lose 30% of its value against the U.S. dollar over the next ten years, then a 1.04% annual return for ten years would be one of the best investments I can make.
The Fed Funds Rate is now 1.75%. What would be happening in the U.S. economy today if that rate was set at, say, 0.75%?
If you think the S&P drops 30% over the next 18 months, 1.04% looks like a decent parking spot.
There is no call feature on US Treasuries.
Why should we let a group of elites manipulate interest rates? Why are they better than the US government securities market, or other very liquid markets?
How many people and businesses pay interest rates tied to the Fed Funds Rate? And (importantly) how much of a difference would a one-point rate cut mean (from 1.75% to 0.75%) anyway?
....amid calls from “insurance” companies, that the Body Mortgage Millstone fell off by the Appeals CT. ruling, and further bundling is in recession.
So you think a group of elites should manipulate interest rates because you don’t think it has much of an effect?
"So, a negative interest rate indicates a strong economy?"
You then wrote "...neither the yield nor the coupon on the 10 treasury is negative. Nor is it negative on any other US debt."
I understand we have no negative yields or coupon rates to date. My answer did not address your point. The question was regarding what the writer believed was if a negative "interest rate" is indicative of a strong economy.
My answer was to explain the yields are a condition of supply and demand. Sorry, you missed my point.
All of my personal and commercial loans are tied to either the WSJ prime rate or the 10-year Treasury rate, not the Fed Funds Rate.
WHO IS PAYING THOSE INTEREST RATES?
All of my personal and commercial loans are tied to either the WSJ prime rate or the 10-year Treasury rate, not the Fed Funds Rate.
...
The prime rate, as reported by The Wall Street Journal’s bank survey, is among the most widely used benchmark in setting home equity lines of credit and credit card rates. It is in turn based on the federal funds rate, which is set by the Federal Reserve.
https://www.bankrate.com/rates/interest-rates/prime-rate.aspx
>>>The Fed Funds Rate is now 1.75%. What would be happening in the U.S. economy today if that rate was set at, say, 0.75%?
Corporate balance sheets are already pretty highly leveraged. All that liquidity the Fed is providing seems to be going into two asset classes, equities and home values. We don’t see a lot of busimnss investment considering the level of rates.
That’s really my point. If you don’t see a lot of business investment when the rates are NEAR historic lows, you’re not likely to see much when they’re AT historic lows, either.
I think they are pushing on a string.
I wonder if activity at west coast ports have increased? That would make me feel better. Otherwise it’s just gas on the fire.
Why would anyone want a 10 year “parking spot” at 1.04 for an 18 month stock correction?
Instead, you would buy a 3 Month Treasury, which is paying 5 basis points over the 10 Year, and you would re-invest every 90 days until the market calmed down.
The point I was making - only gamblers who think interest rates are going to continue to go down, only gamblers who plan to sell their bonds for a profit in the near future, are going to buy the 10 Year.
My Bottom Line - I think it is a really, really bad idea to have a monetary policy that encourages rampant speculation in America's 10 Year and 30 Year sovereign debt.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.