Posted on 02/24/2021 11:27:36 AM PST by RomanSoldier19
The multidecade-long bull market in Treasurys has delivered rich gains to patient investors, but a 2021 bond-market selloff is likely inflicting significant pain on some market participants.
Though many were expecting yields to rise this year as the reflation narrative gained ground, few were prepared for the rapid rise in long-term bond yields since the start of this year. Yields move in the opposite direction of bond prices.
(Excerpt) Read more at msn.com ...
My 30 year treasuries expired 2/15.
Bought some ABBV.
Yet another bailout coming in 5... 4... 3... 2...
How does anyone face a “colossal loss” in U.S. Treasury bonds?
“...a 2021 bond-market selloff is likely inflicting significant pain on some market participants.”
That’s what markets are designed to do.
The entire media has the idea that continued prosperity for bond holders is critical and anytime they have losses the entire nation must mobilize to protect them.
Picked some IRA mutual funds last week for my wife. Picked three with low bond investment for that reason. I think I did the right thing given the bond market situation.
With the increase in the rates, hoping that equities aren’t hammered, too. That will happen if rates move too much. Probably should have put part of it in a commodity fund.
China will only let it slide so far. Of course, we could factor in The US e-dollar, The expanding e-yuan, a weak world economy, and an even weaker President and Congress, sorry for that, I mean weaker president and congress.
How soon they forget about Obama sticking it to GM bondholders, many of them pension funds, and giving ownership to unions. Zer0 is more putrid than buzzard puke.
I think this is why they have their hackles up over bitcoin. Why would you tie your money up for that long at such a low return? I’m not really solid on bitcoin but it was stabler I would go there instead of a 10 year bond.
“How does anyone face a “colossal loss” in U.S. Treasury bonds?”
Hold 30 year till maturity and you get your dollars back. But if inflation rate goes to 6% your initial dollar is then only worth 17 cents.
If you buy at 2% and next year the rate goes to 8% then the value of the bond goes down to give a yield of 8%. You can do the math!
Gold mining companies could issue gold-backed certificates.
So could the Russian government.
There might be a redemption fee of say $5/year for say a one-ounce certificate. If I choose the redeem for the metal in 2031, I would have to pay a redemption fee of $50((2031-2021)*$5) to cover security costs.
In the mid-1960s John Lennon bought a mansion for 21,000 pounds.
In 2008, that mansion was worth about 8,000,000 pounds.
Anybody that would lend money out for 30 years is a fool.
1. Does anyone expect bond yields to go from 2% to 8% over a period of ten years, let alone ONE year?
2. What ever made a U.S. Treasury bill paying 2% an attractive investment in the first place?
The answer to Question #2 is easy: It's an attractive investment for a foreign institution that expects its own currency to decline against the U.S. dollar. They'd settle for a 0% return in many cases!
In the early 1980s a Palm Beach mansion was sold for about $750,000.
I think that mansion was recently sold for about $20 million.
There was also a mansion on Fifth Avenue in NYC that sold for about $600,000 in 1979. Quite a few years ago it was estimated be be worth $13 million.
In the late 1970’s, an Upper East Side townhouse might have fetched $240,000. That might barely cover the annual rent nowadays.
“Anybody that would lend money out for 30 years is a fool.”
I did in 1982 at 14%.
I did in 1992 at 8%.
This fool is nicely retired!
I believe a common British mortgage is a 5-year ARM.
Thirty-year fixed rate mortgages are only purchased by fools and the Federal Reserve.
When you have a bunch of fiscal donkeys running the US economy, expect lots of inflation.
Plywood has doubled in price and steel is up sharply.
“I understand how the math works, but:”
Then why waste my time?
Let me correctly restate:
“Anybody that would lend money out for 30 years” at 3% “is a fool.”
“bitcoin”
I estimate its long-time prospects to be the same as Griffinbucks.
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