The Bond Dream Room

[Kbg]

Even 6.5 years can be to long .

I know my other model I swapped for the pp is up this year .
The most conservative model is 25% equities with the bond side a total bond fund , a high yield fund and a very short term treasury bond fund .....

There is just no bottom in Tlt ...I stopped even trying to add more money to bring it back up ..

I have far more faith in gold

Reading your DT adventures infrequently it seemed you were buying the small dips and selling the small pops...that works until you catch a trend and then it doesn't work so great. TLT is in a definite downward trend. It could turn though, who knows.

If I've mischaracterized, apologies in advance.

[mathjak107]

No , you have it right ..it was easy to trade when it went up as much as down ..you just ride the cycle over and over ...

But once in a trend it is very hard ... Tlt is down almost daily with a few exceptions..been like that since august.

I don’t short stocks but boy what a perfect candidate it was

[whatchamacallit]

Looking at yields around the world I don't see the rate going much higher at all.

I actually think 30 year will be at 1.5% in a month.

I think 1 month bill is about to go negative and the market will get spooked.

Am I calculating it right that 30 year at 2.5% going to 1.5% would only be 24% capital gain? Seems like it should be more.

http://www.rrfinance.com/Fixed_Income/F ... .aspx?ID=2

[Kbg]

Looking at yields around the world I don't see the rate going much higher at all.

I actually think 30 year will be at 1.5% in a month.

Hard to say...we are now actually experiencing "real" materials shortages and if the infrastructure bill goes through shortages could get worse which is the main pre-requisite for serious inflation. In truth, I have no clue nor a strong opinion either way...but there are some differences this time around that haven't been in place for at least 20 years. Whether it becomes broad based inflation will be very interesting to see. In the housing sector there is serious inflation across the board in all building materials.

Printing money != inflation

Printing money + scarcity = inflation

[doodle]

Looking at yields around the world I don't see the rate going much higher at all.

I actually think 30 year will be at 1.5% in a month.

Hard to say...we are now actually experiencing "real" materials shortages and if the infrastructure bill goes through shortages could get worse which is the main pre-requisite for serious inflation. In truth, I have no clue nor a strong opinion either way...but there are some differences this time around that haven't been in place for at least 20 years. Whether it becomes broad based inflation will be very interesting to see. In the housing sector there is serious inflation across the board in all building materials.

Printing money != inflation

Printing money + scarcity = inflation

Inflation requires rising wages at some point. If those don't come in to undergird price increases then everything crashes again. As much as I would like to see the pot distributed more fairly, I don't think that's gonna happen.

We're definitely in some unfamiliar waters at the moment but unless the economy can be in some state other than inflation, deflation, prosperity, or recession I'm not sure what else to do when it comes to holding assets.

As has been said before...this might be the everything bubble..where do you hide from that?

[Kbg]

Inflation requires rising wages at some point. If those don't come in to undergird price increases then everything crashes again. As much as I would like to see the pot distributed more fairly, I don't think that's gonna happen.

Happening...https://www.bls.gov/opub/ted/2021/real- ... y-2021.htm

Of note, not nominal, real.

Completely anecdotal, but the $15hr min wage battle is almost silly now except for the smallest of low end businesses. If you aren't small or low end, most are way beyond $15.

[mathjak107]

The problem we saw in nyc is it wasn’t only about the 15 dollar increase in min wage ...it was having long term employees who advanced , worked hard and learned new skills and made it to 15 an hour .

Now the new guy is at 15 and many companies has to raise the other workers too down the line.

Many fast food places now have a staff of 2 at the counter instead of 4 or 5 ...all ordering is via kiosk and all they do is take money .

Many min wage jobs have been totally eliminated....

[pp4me]

No idea how minimum wage became part of a discussion about Bonds but for my two cents worth, minimum wage laws are about competition for low paying jobs and most of the laws on the books are intended to favor labor unions by limiting competition. Which is why Democrats overwhelmingly favor them, of course.

As many people before me have said, the real minimum wage is $0 if you don't have the skills to compete for one of the minimum pay jobs.

Here in Florida a $15 minimum wage law was passed by the voters. I didn't vote for it but it must have made a lot of people feel good about themselves. Everybody should make at least $15/hour don't you think?

But why not $20?. That would be even better. Probably wouldn't have passed because most people would have thought that was too much. But $15 was just right.

Can we vote on how much politicians should be paid?

[sophie]

I expect that a $15 minimum wage law would result in lots more people being hired for cash under the table. Maybe that's part of the intent, because that's how illegal immigrants can live here without any official presence. And God knows we're now getting a ton more of them.

Good one pp4me. The real minimum wage is indeed $0. $15 will only be if you want to join a union and pay taxes.

[Kbg]

Thought I would resurrect this as much that seems to be a former part is now spawning many new threads.

Anyway, looks like TSP G fund is at 4% now

https://www.tspfolio.com/tspgfundinterestrate

[dualstow]

From the Financial Times, last week, print version:

It was a crisp September day in 2015 when Timothy Young arrived at Houten, an unremarkable Dutch commuter town, determined to col- lect an almost 400-year-old debt. He carried a case containing a fragile piece of goatskin covered in dense writ- ing and numbers. It was a bond, issued in 1648 by a group of Dutch landowners who managed the dikes on a stretch of the river Lek. They had borrowed 1,000 guilders from a local merchant and the bond stated that in return for the loan, the merchant would receive a 5 per cent interest payment every year-for ever.

Although the terms of this so-called "perpetual" bond have changed over centuries of wars, depressions, revolu- tions and new currencies, it is still a valid liability of Stichtse Rijnlanden, a Dutch utility, and is now owned by Yale University's Beinecke Library. Young, a curator at Yale, was collecting €136 of interest from a delighted Dutch official, who had made a giant cheque to commemorate the payment.

…

[Smith1776]

From the Financial Times, last week, print version:

It was a crisp September day in 2015 when Timothy Young arrived at Houten, an unremarkable Dutch commuter town, determined to col- lect an almost 400-year-old debt. He carried a case containing a fragile piece of goatskin covered in dense writ- ing and numbers. It was a bond, issued in 1648 by a group of Dutch landowners who managed the dikes on a stretch of the river Lek. They had borrowed 1,000 guilders from a local merchant and the bond stated that in return for the loan, the merchant would receive a 5 per cent interest payment every year-for ever.

Although the terms of this so-called "perpetual" bond have changed over centuries of wars, depressions, revolu- tions and new currencies, it is still a valid liability of Stichtse Rijnlanden, a Dutch utility, and is now owned by Yale University's Beinecke Library. Young, a curator at Yale, was collecting €136 of interest from a delighted Dutch official, who had made a giant cheque to commemorate the payment.

…

Dang. Cool.

[Xan]

From the Financial Times, last week, print version:

It was a crisp September day in 2015 when Timothy Young arrived at Houten, an unremarkable Dutch commuter town, determined to col- lect an almost 400-year-old debt. He carried a case containing a fragile piece of goatskin covered in dense writ- ing and numbers. It was a bond, issued in 1648 by a group of Dutch landowners who managed the dikes on a stretch of the river Lek. They had borrowed 1,000 guilders from a local merchant and the bond stated that in return for the loan, the merchant would receive a 5 per cent interest payment every year-for ever.

Although the terms of this so-called "perpetual" bond have changed over centuries of wars, depressions, revolu- tions and new currencies, it is still a valid liability of Stichtse Rijnlanden, a Dutch utility, and is now owned by Yale University's Beinecke Library. Young, a curator at Yale, was collecting €136 of interest from a delighted Dutch official, who had made a giant cheque to commemorate the payment.

…

Dang. Cool.

Very cool. But... he went all the way to the Netherlands for a €136 payment?

[Smith1776]

Very cool. But... he went all the way to the Netherlands for a €136 payment?

Hopefully he got a nice vacation out of it!

[dualstow]

Very cool. But... he went all the way to the Netherlands for a €136 payment?

Good point. Doesn’t even cover the flight!
Yeah. What Smith said.

[dualstow]

Bond yields going up (so prices down).
According to one letter I read, it's strong economic growth, a heavy demand for mortgages and a surge in oil prices.

[Dieter]

Bond yields going up (so prices down).
According to one letter I read, it's strong economic growth, a heavy demand for mortgages and a surge in oil prices.

Can only say "ouch"

[ochotona]

Huh? What surge in oil prices? $71.27 right now.

If oil falls below $60 they start shutting-in wells, because some of them stop creating positive cashflow.

Maybe your State adds lots of taxes on top of your gasoline prices. Here in Houston gasoline is $2.50. That's $0.39 in fifty-years-ago Dollars.

[yankees60]

Huh? What surge in oil prices? $71.27 right now.

If oil falls below $60 they start shutting-in wells, because some of them stop creating positive cashflow.

Maybe your State adds lots of taxes on top of your gasoline prices. Here in Houston gasoline is $2.50. That's $0.39 in fifty-years-ago Dollars.

I do remember paying $0.15 per gallon in the late 60s. It was a huge deal in 1979 when gas first hit $1.00. Did not stay at that level for long.

[welderwannabe]

Bond yields going up (so prices down).
According to one letter I read, it's strong economic growth, a heavy demand for mortgages and a surge in oil prices.

Or its is inflation expectations. Since the fed cut 50bp the 30 year has gone up 50bp.
That lines up with the increase in gold, which tends to go down when interest rates go up. However not this time.

Fed cut too much too soon based on the data, should have started with a 25bp and monitored. Instead a bold move to possibly try to help out with the election.

Long term debt market has been soft for sometime, no one wants it with our fiscal situation. There is a reason why the US Treasury has been issuing mostly short term debt, even with an inverted yield curve which meant it cost them more. They know the market won't absorb a lot of long term debt, not only because of our national debt and increasing deficits as far as the eye can see, but countries are reducing holding of US Treasurys as their reserves since we scared them all with how we treated russia after the Ukraine invasion. Stealing their dollar denominated reserves and kicking them out of SWIFT set a very bad precedent that made other countries nervous.

Anyways, went down a serious rabbit whole there sorry.

I've read the same excuses as you, while a heavy demand for mortgages and oil prices are possible excuses, I don't believe them. The oil issues are caused by instability in the middle east, which usually causes some level of flocking to Treasurys as a safe haven, which we aren't seeing.

Strong economic growth, to the extent it creates inflation concerns with the fed cutting, is much more plausible, but I think the real reason is the US is rapidly running out of rope with their ability to issue endless debt. Fewer and Fewer people want our long term debt as our health over the 30 year term of a TBond is questionable. We're either gonna default, or inflate it away. Neither option is good for holders of long term nominal Treasurys.

[boglerdude]

They both print like crazy, why is china 2% 10-year rate and russia 16% 10-year?

[barrett]

They both print like crazy, why is china 2% 10-year rate and russia 16% 10-year?

I have no idea on Russia but I believe that China has been in a deflationary spiral since they locked everything down after the 2022 Winter Olympics and kept everyone essentially shut inside their homes for 9-10 months. Unemployment, especially youth unemployment, is incredibly high there. Property values (where the Chinese tend to hold a lot of their wealth) have gotten crushed. A lot of manufacturing has moved to other countries. Plus, I would guess that Chinese investors don't necessarily trust that they will be paid back in full if they lend to the government. I have no idea on the overall numbers but workers are leaving China when they can. Some have gone to South Korea & Japan, some are coming to the US, etc. It's probably a tiny percentage of the overall population but a bad trend.

Wife is Chinese and gets a lot of her information from overseas Chinese many of which I believe are from Taiwan. So the information could be quite biased but seems to be true for the most part from speaking to a few people who we know who have gone back to the mainland visit.

[dualstow]

Is she reading wenxuecity?

[barrett]

Is she reading wenxuecity?

No, not reading wenxuecity. Just listening to commentators online but, as I mentioned, we have also gotten some info from recent visitors to the mainland that corroborates what she has been hearing online.

BTW, do you recommend wenxuecity as a reliable source?

[dualstow]

My Chinese is too poor to say one way or the other.
I just know that my wife reads it all the time and whenever I mention some news, she already knows about it.
I’ve only used it to practice reading headlines and pick up some vocabulary.