Falling yields

Discussion of the Bond portion of the Permanent Portfolio

Moderator: Global Moderator

User avatar
doodle
Executive Member
Executive Member
Posts: 4658
Joined: Fri Feb 11, 2011 2:17 pm

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.
boglerdude
Executive Member
Executive Member
Posts: 1313
Joined: Wed Aug 10, 2016 1:40 am
Contact:

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
whatchamacallit
Executive Member
Executive Member
Posts: 750
Joined: Mon Oct 01, 2012 7:32 pm

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.
User avatar
Cortopassi
Executive Member
Executive Member
Posts: 3338
Joined: Mon Feb 24, 2014 2:28 pm
Location: https://www.jwst.nasa.gov/content/webbL ... sWebb.html

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

Image
User avatar
doodle
Executive Member
Executive Member
Posts: 4658
Joined: Fri Feb 11, 2011 2:17 pm

Re: Falling yields

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

The inflation hysteria got out of control
User avatar
I Shrugged
Executive Member
Executive Member
Posts: 2062
Joined: Tue Dec 18, 2012 6:35 pm

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.
User avatar
doodle
Executive Member
Executive Member
Posts: 4658
Joined: Fri Feb 11, 2011 2:17 pm

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.
User avatar
I Shrugged
Executive Member
Executive Member
Posts: 2062
Joined: Tue Dec 18, 2012 6:35 pm

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.
User avatar
Tortoise
Executive Member
Executive Member
Posts: 2751
Joined: Sat Nov 06, 2010 2:35 am

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"?
User avatar
I Shrugged
Executive Member
Executive Member
Posts: 2062
Joined: Tue Dec 18, 2012 6:35 pm

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?
User avatar
Kriegsspiel
Executive Member
Executive Member
Posts: 4052
Joined: Sun Sep 16, 2012 5:28 pm

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 there, Ephialtes. May you live forever.
User avatar
doodle
Executive Member
Executive Member
Posts: 4658
Joined: Fri Feb 11, 2011 2:17 pm

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 7317 times
USA
1200px-USA2020dec1.png
1200px-USA2020dec1.png (186.68 KiB) Viewed 7317 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 7317 times
User avatar
doodle
Executive Member
Executive Member
Posts: 4658
Joined: Fri Feb 11, 2011 2:17 pm

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.
stuper1
Executive Member
Executive Member
Posts: 1365
Joined: Sun Mar 03, 2013 7:18 pm

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?
User avatar
Kriegsspiel
Executive Member
Executive Member
Posts: 4052
Joined: Sun Sep 16, 2012 5:28 pm

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 there, Ephialtes. May you live forever.
whatchamacallit
Executive Member
Executive Member
Posts: 750
Joined: Mon Oct 01, 2012 7:32 pm

Re: Falling yields

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

MangoMan 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.
User avatar
I Shrugged
Executive Member
Executive Member
Posts: 2062
Joined: Tue Dec 18, 2012 6:35 pm

Re: Falling yields

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

MangoMan 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!
User avatar
doodle
Executive Member
Executive Member
Posts: 4658
Joined: Fri Feb 11, 2011 2:17 pm

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
SomeDude
Executive Member
Executive Member
Posts: 1080
Joined: Sun Nov 22, 2020 1:45 am

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.
User avatar
vnatale
Executive Member
Executive Member
Posts: 9422
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: Falling yields

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

Capture.JPG
Capture.JPG (90.03 KiB) Viewed 8051 times
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
dockinGA
Executive Member
Executive Member
Posts: 245
Joined: Tue May 04, 2021 9:29 am

Re: Falling yields

Post by dockinGA » Fri Jun 25, 2021 10:32 am

SomeDude wrote:
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.
What will you say when your children move away to pursue their career? Will you be happy if they don't move back to help you in your old age? Will you be happy if they do move back, knowing that they may have uprooted their own career and family to do so? \

I'm 39, no kids. I love kids, but apart from a very short time period before I got married, I've never felt any urge whatsoever to have children of my own. If I'd had kids, I suppose I would've enjoyed it, but I've also enjoyed aspects of not having children. It's just not something I feel the urge to do, so I won't upset the applecart. My wife feels the same way, and I know several other couples, usually younger than us, that feel the same way. In most cases, they're far more 'anti-kid' than I am. It's best to say that I'm neutral on children.

I've seen people deal with losses of children at early ages, or other significant medical issues. On the outside, they handled it as well as possible, but I shudder to think of what they went through on the inside. I know that for me, dealing with something like that with a child would be life-wrecking stuff. Absolutely devastating. Slightly less devastating would be an older child ruining their life with drugs or alcohol. Anyway, just my 2 cents worth. Kids have gone from being a requirement throughout most of human history, to something of a luxury.
User avatar
Tortoise
Executive Member
Executive Member
Posts: 2751
Joined: Sat Nov 06, 2010 2:35 am

Re: Falling yields

Post by Tortoise » Fri Jun 25, 2021 12:43 pm

There's a pretty noticeable correlation between fertility rate and participation in organized religion. For example, devout Muslim populations around the world are among the fastest-growing, and Latino immigrants in the US (the majority of whom attend church weekly) have much higher birth rates than the general population.

The gradual drop in fertility rate is multifactorial, but clearly organized religion is one of the big factors.

In traditional organized religions like Islam, Christianity, and Orthodox Judaism, men and women are generally expected to get married, and women are generally expected to have and raise children rather than be career-driven. They don't have to do it, but social pressure nudges them in that direction.

Regular church attendance has been steadily dropping in the US over the past few generations, so predictably the fertility rate has been steadily dropping as well. Women in the US nowadays prefer to build careers rather than families.
User avatar
Kriegsspiel
Executive Member
Executive Member
Posts: 4052
Joined: Sun Sep 16, 2012 5:28 pm

Re: Falling yields

Post by Kriegsspiel » Fri Jun 25, 2021 6:22 pm

I wonder what effect the lack of new frontiers plays? Pioneers breed like rabbits, which might explain the high fertility of some religious groups (Muslims in Europe, Mexicans in America, Mormons, Amish, Israeli Jews). A very recommended book on the topic: The Great Frontier by Webb.
You there, Ephialtes. May you live forever.
perfect_simulation
Full Member
Full Member
Posts: 61
Joined: Mon Aug 17, 2020 4:04 pm

Re: Falling yields

Post by perfect_simulation » Sat Jun 26, 2021 12:43 pm

Tortoise wrote:
Fri Jun 25, 2021 12:43 pm
Women in the US nowadays prefer to build careers rather than families.
So deflation? The end is nigh.
User avatar
doodle
Executive Member
Executive Member
Posts: 4658
Joined: Fri Feb 11, 2011 2:17 pm

Re: Falling yields

Post by doodle » Thu Jul 08, 2021 6:14 am

I guess that inflation fear mania really signaled a buying opportunity for long bonds. What say all the interest rate vigilantes now?
Post Reply