Posted on 10/12/2023 1:53:35 PM PDT by BusterDog
US 10-year yields are rising at a rapid pace. US 10-year yields have risen to 4.70% from 4.0% since early August.
The moves have come despite stable market-measured inflation and Fed expectations. Aside from some moderate underlying strength, there haven't been any big economic surprises either.
The scariest part about it is that there's no good explanation for why it's happening.Lately, there's been some hope that it was quarter-end or some kind of one-off puke but with two auctions missing this week (including today), it's increasingly clear that real-money demand just isn't there. There are scenarios where this blowout isn't necessarily a bad thing and scenarios where it's terrifying.
(Excerpt) Read more at forexlive.com ...
I don’t know much about the bond market, but Rush used to say it was a contra-indicator of the market.
When bonds are a good buy, its bad for the economy- and vice-versa.
More Panic Porn
It is time for another Panic Porn Picnic
Pass the Popcorn Please
Scary.
“More Panic Porn”
****
Is the Honest Nigerian long bonds, equities, or the USD?
Right now stock markets are walking on a high right rope. Everything is fine so long as you don’t lose balance.
What do you think happens when you have essentially free money for 15 years and endless quantitative easing.
What does this mean to those that own them?
When the yield on Treasury bonds rises significantly, it can provide an alternative to dividend-paying stocks. Investors might prefer the safety of bonds over the risks associated with stocks, resulting in a decrease in stock prices.
Impact on Businesses: Higher borrowing costs can impact corporate profits.
“safety of bonds”
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Like all those people holding 1.5% bonds that are worth less than 50% what they paid for them.
Ok, “relative” safety of bonds (in comparison to stocks).
One price and interest rates move in opposite directions, if you own bonds and interest rates are going up you bonds are losing value
This is only confusing for those on Wall Street that don’t understand basic economics or history
You can’t print money forever and an exploding deficit are deadly to the bond market
We are 33 trillion in debt and as that debt gets refinanced the deficit begins to skyrocket, because dollars borrowed at 0% interest are being refinanced at 5% and going higher rates which means 33 trillion today will be 50 trillion in a few years which will never be paid t
If you loaned money and thought you might not be paid back it’s only natural you would ask for higher rates upfront
Project Sandman has been discussed.
That bubble amounts to confidence, no more, no less. When it bursts, it happens fast. As long as everyone agrees that currencies are what they say they are, currencies stay afloat and surf the waves of confidence.
When confidence bursts, the only cure will be hard assets.
Explains rates but not the USD.
“the only cure will be hard assets”
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Would go down, too, no buyers.
One can buy investment grade corp bond funds paying 8.5%-
Mortgages-8%
Oil $80/bbl
strong dollar
all moving higher-
I dunno how equities win here but I’m sure they’ll prove me wrong.
“I dunno how equities win here but I’m sure they’ll prove me wrong.”
****
Maybe forever war is what it’s about, you can get away with the fx printing and higher rates / inflation to get rid of older debt.
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