Falling yields

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doodle
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Falling yields

Post by doodle » Wed Jun 09, 2021 7:10 pm

Fed talking about tapering, everyone freaking out about inflation but the bond market shrugs it off and yields continue to drop...hmmm, almost as if maybe this whole inflation thing has been overblown again.
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Re: Falling yields

Post by boglerdude » Thu Jun 10, 2021 1:04 am

There's no market, Fed has fingers on the scale. Cf BOJ owning all the bonds and working on the stocks

https://www.marketwatch.com/story/bank- ... 2021-03-19
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Re: Falling yields

Post by whatchamacallit » Thu Jun 10, 2021 9:58 am

boglerdude wrote:
Thu Jun 10, 2021 1:04 am
There's no market, Fed has fingers on the scale. Cf BOJ owning all the bonds and working on the stocks

https://www.marketwatch.com/story/bank- ... 2021-03-19
If there is no market, then what assets are being bought?

I had in my head that the banks would still be buying treasuries and holding instead of the bank reserves they are holding now.
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Re: Falling yields

Post by Cortopassi » Fri Jun 18, 2021 3:23 pm

Interesting divergence lately from the much maligned TLT and the always hated gold...

Image

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Re: Falling yields

Post by vincent_c » Sun Jun 20, 2021 10:46 pm

Seriously, where have all the bond bears gone?
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doodle
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Re: Falling yields

Post by doodle » Mon Jun 21, 2021 12:14 am

The inflation hysteria got out of control
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I Shrugged
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Re: Falling yields

Post by I Shrugged » Mon Jun 21, 2021 8:07 am

Inflation is here. But the bond market must feel the Fed will manage it. It’s a high wire act for sure.
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Re: Falling yields

Post by vincent_c » Mon Jun 21, 2021 8:44 am

So just because inflation is here doesn't mean that yields should rise.

I would expect yields to rise when inflation is increasing and it has been. The pandemic was a huge deflationary shock and to have yields back around 2% is already an indication that there has been inflation over what we might have seen had we not had the coordinated efforts by the central banks and governments.

The question is, does everyone expect persistent high inflation going forward and what is different now versus before the pandemic when it was pretty tough to generate inflation. Instead are we more likely to see prices spike and then stay there or slowly increase?

The risks also seem asymmetric here. If the Fed tapers earlier than expected by what the bond market has priced in then yields are coming down. It seems more unlikely for the Fed to keep the tap open longer than what the market is expecting because the narrative has initially been set to "do whatever it takes" and that there would be low interest rates as long as is needed/there is a weak labor market.

In order to make a bear case for bonds you'd have to believe that either 1) the bond market has not fully priced in stimulus and low interest rates; or 2) that the Fed is not going to react to an overheating economy.

Is there anyone out there that believes that we have an overheating economy or we are at risk of one?
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Re: Falling yields

Post by doodle » Mon Jun 21, 2021 12:09 pm

People are completely ignoring deflationary headwinds from declining demographics amongst all major economies including China, technology advances, high levels of debt, overextended asset prices, and gridlocked government.
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I Shrugged
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Re: Falling yields

Post by I Shrugged » Mon Jun 21, 2021 1:25 pm

We could have an overheating economy in the short term. I see signs everywhere that the US is awash in money. Put it this way, people with money are on a spending spree.

But I also sympathize with the deflation trends argument.

I like the PP.
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Re: Falling yields

Post by Tortoise » Mon Jun 21, 2021 1:36 pm

There may be deflationary headwinds, but the money printer goes "Brrrrrrr..."

How much money would the government have to print before a person arguing deflationary headwinds would have little choice but to concede, "Okay, I guess that much printed money might overcome the deflationary headwinds and cause some noticeable inflation"?
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Re: Falling yields

Post by vincent_c » Mon Jun 21, 2021 2:46 pm

But what is being priced in?
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Re: Falling yields

Post by I Shrugged » Wed Jun 23, 2021 12:04 pm

I’m in my sixties and I’ve never seen wages go down. They are going up now, a lot. Does anyone think they will retreat? If not, doesn’t that spell sustained inflation?
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Re: Falling yields

Post by vincent_c » Wed Jun 23, 2021 1:20 pm

Do you think that wages are going to go up a lot persistently for a long time?
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Re: Falling yields

Post by Kriegsspiel » Wed Jun 23, 2021 1:20 pm

In the US, more people are entering their peak spending/reproducing/earning years

Image

So it's plausible that we will not be deflating bigly just yet. As for:
doodle wrote:
Mon Jun 21, 2021 12:09 pm
People are completely ignoring deflationary headwinds from declining demographics amongst all major economies including China, technology advances, high levels of debt, overextended asset prices, and gridlocked government.
As the Zeihan says, "The United States economy is the least internationally linked of the significant powers. The fractions vary widely based on whose data you’re using, but as a rule the American economy is roughly one-third as dependent upon exports as the major Asian or European economies. link"

A demographically-collapsing country can still export goods and manufacturing abroad (like Japan). They just might not have enough citizens to have their own consumer-economy, but how would this be deflationary for the US?
"You haven't, I suppose, ever mixed with politicians at close quarters. They're awful. I think some of these must have been the dregs anyhow, but I've discovered, what previously I didn't believe possible, that politicians behave in private life and say exactly the same things as they do in public. Their stupidity is inhuman.
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doodle
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Re: Falling yields

Post by doodle » Wed Jun 23, 2021 8:52 pm

Japan
Japan_population_pyramid_10.01.2019.png
Japan_population_pyramid_10.01.2019.png (127.62 KiB) Viewed 661 times
USA
1200px-USA2020dec1.png
1200px-USA2020dec1.png (186.68 KiB) Viewed 661 times
and lets compare that to 1965
Population+Pyramid+–+1965+Source_+U.+S..jpg
Population+Pyramid+–+1965+Source_+U.+S..jpg (54.98 KiB) Viewed 661 times
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doodle
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Re: Falling yields

Post by doodle » Wed Jun 23, 2021 9:18 pm

In the US, more people are entering their peak spending/reproducing/earning years
But they dont seem to be reproducing...and children are one of the primary reasons driving housing and spending.

To me it seems that relative to 60 years ago we have strongly declining demographics. How long it takes to play out and show up in system is anyones guess given all the variables but I dont see how our nonexistant pyramid drives increasing demand going forward.
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Re: Falling yields

Post by stuper1 » Thu Jun 24, 2021 10:46 am

Isn't that why the elites are pushing us to accept ever more immigrants?
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Re: Falling yields

Post by Kriegsspiel » Thu Jun 24, 2021 7:23 pm

doodle wrote:
Wed Jun 23, 2021 9:18 pm
In the US, more people are entering their peak spending/reproducing/earning years
But they dont seem to be reproducing...and children are one of the primary reasons driving housing and spending.
Originally I had something in my earlier post about how the Boomers might be spared a lot of the demographic problems, and it may actually be the Millennials who get hit the hardest. On the other hand, what if increased automation and robotics keeps productivity high in the face of falling population? Last I checked, standards of living in Japan aren't horrific.
"You haven't, I suppose, ever mixed with politicians at close quarters. They're awful. I think some of these must have been the dregs anyhow, but I've discovered, what previously I didn't believe possible, that politicians behave in private life and say exactly the same things as they do in public. Their stupidity is inhuman.
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Re: Falling yields

Post by pugchief » Thu Jun 24, 2021 7:45 pm

Anyone want to speculate as to why Millenials are not reproducing?
Could it be low testosterone in the males?
Or the fact that obese, tattooed feminists with purple hair are not appealing to men?
Or maybe the men are smart enough to realize that family law courts are going to destroy them in 7 years when the divorce happens?
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Re: Falling yields

Post by whatchamacallit » Thu Jun 24, 2021 8:22 pm

pugchief wrote:
Thu Jun 24, 2021 7:45 pm
Anyone want to speculate as to why Millenials are not reproducing?
Could it be low testosterone in the males?
Or the fact that obese, tattooed feminists with purple hair are not appealing to men?
Or maybe the men are smart enough to realize that family law courts are going to destroy them in 7 years when the divorce happens?
Not sure about low testosterone but the future looking so bleak doesn't help.

What were the incentives for baby boomers? I can't come up with any current incentives for our society.
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Re: Falling yields

Post by I Shrugged » Thu Jun 24, 2021 9:00 pm

pugchief wrote:
Thu Jun 24, 2021 7:45 pm
Anyone want to speculate as to why Millenials are not reproducing?
Could it be low testosterone in the males?
Or the fact that obese, tattooed feminists with purple hair are not appealing to men?
Or maybe the men are smart enough to realize that family law courts are going to destroy them in 7 years when the divorce happens?
Somewhat the last one, somewhat what What said. And a lot about self actualization. Babies are too expensive and lifestyle cramping for young people now. Millions of years of evolution and individual lineage survival against great odds comes to an end due to wanting to have better stuff and travel. Okay then!
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doodle
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Re: Falling yields

Post by doodle » Thu Jun 24, 2021 11:20 pm

Main reasons I'm not interested in having kids:

Expensive
Too much responsibility
Future too uncertain
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Re: Falling yields

Post by SomeDude » Fri Jun 25, 2021 8:36 am

doodle wrote:
Thu Jun 24, 2021 11:20 pm
Main reasons I'm not interested in having kids:

Expensive
Too much responsibility
Future too uncertain
As someone who had a baby girl last year and has a boy due in December......it is hard but well well worth it.

Your capacity for love will grow massively and they will bring joy into your life.

Depending on your income they are not that expensive. The tax deductions and credits at my income level for getting a wife and two kids is probably $20k or more.

Having a family to care for you when you're older is a big plus too.

And i go out drinking and philandering a LOT less.
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Re: Falling yields

Post by vnatale » Fri Jun 25, 2021 8:48 am

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