Posted on 07/05/2016 9:32:54 PM PDT by Olog-hai
Fear and uncertainty about the global economy are leading investors to embrace the relative safety of U.S. government debt and slashing yields to record lows.
Interest paid on the 10-year Treasury note reached 1.38 percent late Tuesday, just below the previous record set in 2012. Historically, when concerns have flared about a potential recession, investors have shifted money into havens such as U.S. Treasurys and sent yields falling.
The market’s signal this time seems somewhat hazier than usual, and there's far from any consensus among economists that a recession is approaching.
As recently as the start of June, the yield on the Treasury note was 1.85 percent. Then the U.S. government issued an anemic May jobs report. And Britain voted to abandon the European Union — a move that caught markets off guard and magnified concerns about the global economic order. …
(Excerpt) Read more at bigstory.ap.org ...
Just my luck. Got some 5-yr CDs maturing this week.
I believe you have this all wrong. Rates are low, and bonds are being sucked up because central banks are buying them. And treasuries are forcing banks to buy government bonds. Don’t think for a moment that investors are buying bonds. They aren’t. They can’t. This is a Madoff style pyramid scheme. Governments can’t pay their debt. So they are buying as much as they can themselves by printing money. And the banks are buying the rest. Whatever you do, stay away from banks, especially European banks. They are going under without government bailouts.
The appetite for US Tsys even at these pitiful rates is like nothing I have ever seen, other than teenage girls clamoring for Justin Bieber CDs at a concert.
I have to suspect it is foreign banks looking to create a spread against the negative rates they offer their bondholders. I cannot fault the strategy; US banks have apparently reliquified themselves on a mere .25% paid on their reserves.
Bonds have truly undergone a generational, parabolic move. There are 15 year mortgages available now with about a 2.75% rate and 30 years about 3.1%.
It’s good, I guess, if you wish to refi a piece of real estate. For want of a better word, it’s borderline terrifying if you believe what it says about the direction of the economy.
Gregory Mannarino.
https://m.youtube.com/watch?v=IVgf0XxDhRU
https://m.youtube.com/watch?v=5S5JFHyRgHE
People aren’t buying for the yield, they are buying for the face value. A lot of people are getting rich on the bond bubble.
and there’s far from any consensus among economists that a recession is approaching.
______________________________________________________
As they say: ‘you could connect ever economist in the world end to end, and they still would not reach a conclusion’.
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.