Posted on 04/04/2021 9:11:23 AM PDT by SaxxonWoods
Yardeni coined the phrase bond vigilantes in the early 1980s to describe investors who want higher yields for government bonds as compensation for rising inflation.
In this case, bond vigilantes are reacting to trillions of dollars in coronavirus aid pouring into the economy. They’re skeptical of Federal Reserve Chief Jerome Powell and Treasury Secretary Janet Yellen’s view inflation will be transient.
For now, Yardeni is in the transient camp.
(Excerpt) Read more at cnbc.com ...
Here's the historical chart for the yield on 10yr Treasuries. Look where we've been over time and where we are now.
People said it was the end of the world when short-term rates went to zero. Now it's the end of the world that short-term rates are barely above zero.
The FED pretends it sets rates, but of course the bond market sets rates on everything but overnight funds. The FED has no choice but to follow the bond market if it pushes yields up, as we have seen before.
Doomers can post their fear-porn below.
The surest way to increase inflation is to impose more taxes on companies that will then be priced into their products.
I think that is undecided. Increasingly in the last decades, central banks have engaged actively in trying to manipulate rates across the yield curve ie) yield curve control.
Are they successful? I don’t think anyone knows the long-term answer, but the important thing is - they will TALK and they will TRY.
I think everyone overlooks the fact just as important to growth in money supply, or commercial loan, government, politicians and regulation can and will damage the supply of goods.
Bkmk
Hmmm....Joe Biden....Jimmy Carter....Joe Biden....Jimmy Carter.
Jimmy Carter has some redeeming qualities—just not as President. One thing that I do remember him fondly for, though, was the 16.65% interest that I earned on a Certificate of Deposit that I bought during his term. Of course, my friends, whose variable interest rate on their house went to 18%, didn’t thing of him so fondly.
If we start slinging government money around like we’re doing, Yardeni’s 3% Treasury yield prediction is going to look rather quaint.
The Federal Reserve is the FBI of finance. Not to be trusted!
Your chart ends at 2017
10 year rates were 0.76 first week of November 202.
Now, buddy says 3& is not a problem
Cept for everyone who purchased a note at 0.76%, and now watched value crater as market rates got to 3%.
Cept for Government who rolls over a 0.76% bond with a 3% bond, and blows up their budget with massive interest payment increases
We still have old Series E bonds that are paying 4%!
The economy is “red hot” for the big-government/big-corporate criminal complex.
For actual human beings, not so much.
“Yardeni coined the phrase bond vigilantes in the early 1980s to describe investors who want higher yields for government bonds as compensation for rising inflation.”
So wanting to invest in something that has a positive return (or not putting your money in a guaranteed loser) makes you a vigilante?
So, given this basket of lemons, how do we go about making lemonade.
I myself am stocking up on lots of TBT call options to sweeten the lemonade.
What’s everybody else doing?
Not dealing with current fluctuations but maintaining a long term investment in diversified mutual funds and an adequate cash reserve
It is in effect betting on America
I think the lights flash yellow at 3%.
In am not sure of the current age of the US debt, but the Fed will try to push it out. If that is coupled with rising rates, the overall burden will soon grow to unsustainable levels.
So, I think people notice at 2%. They get nervous at 3%—which exceeds the inflation target. At 6%? Gold and silver start looking real good.
My first mortgage in ‘88 was a 15%, 1 year adjustable with a 2% cap. When I sold it, the rate was getting ready to move up.
It was nuts. I should have rented.
So what? The wrong investments never work out.
Love it.
You should check...some of them cap out. My wife had one that her aunt bought for her in 1965.
Found it in a box of savings bonds in her room when she passed. A shoe box full of savings bands—can you imagine? It took three days for the local branch to go through them all.
I own TBT straight up, no options. And some of most everything else. Things are great, but then, they’ve been great for 50 years.
“People said it was the end of the world when short-term rates went to zero. Now it’s the end of the world that short-term rates are barely above zero.”
In Germany and Japan the rates have actually dipped below zero.
But what I haven’t been able to understand is given this flood of cheap money, why is inflation still low and why are investors still willing to buy bonds that are yielding next to nothing?
What’s your explanation?
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