Posted by DigiNomad on 23rd of May 2023 at 10:52 am
Bonds - higher yields / lower prices. As tempting as the 10 year
is here (the idea of locking in 3.73% for 10 years is attractive
after so many years near zero), it doesn't make much sense that
it's this low with short term rates at 5% and expected to stay
there or even go higher. If higher for longer is correct (I think
it is, but the bond market doesn't necessarily agree...yet), then
bond yields at the longer end of the curve have to adjust higher
eventually. That makes the 10 year a lot less attractive,
given the duration risk. *I'm not an expert in bonds or
currencies*
Thanks. I foresee a possibility of indexes adjusting lower
instead of bond prices adjusting higher, essentially a reversal of
the discrepancy that occurred in December of last year. Back then
one month worth of move on bonds went unnoticed.
Posted by DigiNomad on 23rd of May 2023 at 11:10 am
Maybe eventually. Right now we have monetary policy pushing in
one direction but being overpowered by fiscal policy. Fiscal policy
seems to be stuck in buy votes mode. Hard to imagine that dynamic
changing between now and the election. As we all learned in
business school, their are two major levers for controlling
inflation, monetary and fiscal policy. Monetary policy is
considered the blunt instrument relative to fiscal policy. Powell
can't complain publicly, but I'm sure he's frustrated privately
that the media is fine not talking about the role of fiscal policy
in controlling inflation (and its recent failures).
Newsletter
Subscribe to our email list for regular free market updates
as well as a chance to get coupons!
DigiNomad, what is your outlook
DXY 2 hour - negative divergences setting up as we ...
Posted by junkie on 23rd of May 2023 at 10:38 am
DigiNomad, what is your outlook for bonds?
Bonds - higher yields /
Posted by DigiNomad on 23rd of May 2023 at 10:52 am
Bonds - higher yields / lower prices. As tempting as the 10 year is here (the idea of locking in 3.73% for 10 years is attractive after so many years near zero), it doesn't make much sense that it's this low with short term rates at 5% and expected to stay there or even go higher. If higher for longer is correct (I think it is, but the bond market doesn't necessarily agree...yet), then bond yields at the longer end of the curve have to adjust higher eventually. That makes the 10 year a lot less attractive, given the duration risk. *I'm not an expert in bonds or currencies*
Thanks. I foresee a possibility
Posted by junkie on 23rd of May 2023 at 11:02 am
Thanks. I foresee a possibility of indexes adjusting lower instead of bond prices adjusting higher, essentially a reversal of the discrepancy that occurred in December of last year. Back then one month worth of move on bonds went unnoticed.
Maybe eventually. Right now we
Posted by DigiNomad on 23rd of May 2023 at 11:10 am
Maybe eventually. Right now we have monetary policy pushing in one direction but being overpowered by fiscal policy. Fiscal policy seems to be stuck in buy votes mode. Hard to imagine that dynamic changing between now and the election. As we all learned in business school, their are two major levers for controlling inflation, monetary and fiscal policy. Monetary policy is considered the blunt instrument relative to fiscal policy. Powell can't complain publicly, but I'm sure he's frustrated privately that the media is fine not talking about the role of fiscal policy in controlling inflation (and its recent failures).