Treasury Yield Curve - June 3 2019

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moda0306
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Treasury Yield Curve - June 3 2019

Post by moda0306 » Tue Jun 04, 2019 4:37 pm

Anybody noticing the "U Shaped" yield curve?

https://www.treasury.gov/resource-cente ... data=yield

The long and short ends of the curve are the best, with the middle dipping in the lowest around the 3 year mark.

Just thought it was interesting... closest thing we've seen to an inverted yield curve in over a decade, if I'm not mistaken.
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Re: Treasury Yield Curve - June 3 2019

Post by pmward » Tue Jun 04, 2019 4:41 pm

Every time I look at yields the last few weeks, I can't help but think "wow, that escalated quickly". Bond markets seem completely sold on the fact that we are 6 months - 1 year out of a recession.
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Re: Treasury Yield Curve - June 3 2019

Post by jacksonM » Tue Jun 04, 2019 7:16 pm

Seems to me an ideal time for the PP to do well.

I don't know about the rest of you but I think I had my biggest one day gain ever today. Told my wife if we could do this every day it would be better than winning the lottery.
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Re: Treasury Yield Curve - June 3 2019

Post by moda0306 » Wed Jun 05, 2019 9:52 am

pmward wrote:
Tue Jun 04, 2019 4:41 pm
Every time I look at yields the last few weeks, I can't help but think "wow, that escalated quickly". Bond markets seem completely sold on the fact that we are 6 months - 1 year out of a recession.
How are you getting that timeframe? If rates aren't really low until we get to 2-3 years into the yield curve, how do you conclude 6-12 months?

I could be totally wrong so don't interpret any amount of condescension from my post... just asking.. my bond game is a bit rusty.
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Re: Treasury Yield Curve - June 3 2019

Post by moda0306 » Wed Jun 05, 2019 9:55 am

jacksonM wrote:
Tue Jun 04, 2019 7:16 pm
Seems to me an ideal time for the PP to do well.

I don't know about the rest of you but I think I had my biggest one day gain ever today. Told my wife if we could do this every day it would be better than winning the lottery.
Bonds and Gold have done ridiculously well (as has the PP) the last 6 months. Add to that stocks not seeming like a valuable asset class, and I'll just be buying up SHV (correction from SHY) as I save in my buckets. I might even sell some of the lower-yield mid-duration ETF positions I have (3-year-to-10-year) in favor of a barbell of TLT and SHY, but not sure on that.

Still haven't graduated to buying actual bonds...
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Re: Treasury Yield Curve - June 3 2019

Post by pmward » Wed Jun 05, 2019 11:07 am

moda0306 wrote:
Wed Jun 05, 2019 9:52 am
pmward wrote:
Tue Jun 04, 2019 4:41 pm
Every time I look at yields the last few weeks, I can't help but think "wow, that escalated quickly". Bond markets seem completely sold on the fact that we are 6 months - 1 year out of a recession.
How are you getting that timeframe? If rates aren't really low until we get to 2-3 years into the yield curve, how do you conclude 6-12 months?

I could be totally wrong so don't interpret any amount of condescension from my post... just asking.. my bond game is a bit rusty.
Yeah lowest is 2-3 years out, but we start dropping quickly from 6 months to 1 year. The start of a recession is usually months before the deepest part. Starting recession in about one year, and the recession lasting about a year, is what the curve looks like to me. Though, as you alluded to, interpreting the yield curve is more art than science.
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Re: Treasury Yield Curve - June 3 2019

Post by moda0306 » Wed Jun 05, 2019 12:29 pm

I've also found it interesting that a 5 year treasury will yield me 1.9% but I can get a 5 year CD for 3%. I know hardcore PP philosophy shies away from FDIC insured accounts vs treasuries, I still can't get over when there's a nice spread between the two.
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Re: Treasury Yield Curve - June 3 2019

Post by Xan » Wed Jun 05, 2019 2:24 pm

Unless we're talking about so much money that FDIC doesn't apply, and it's money you could wait for in a potential crisis, I agree with you.
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Re: Treasury Yield Curve - June 3 2019

Post by Tortoise » Wed Jun 05, 2019 4:40 pm

Are the banks that currently offer 5-year CDs at 3% basically taking a loss on the CDs in order to hopefully attract new customers who will also sign up for lines of credit (from which the bank actually makes its money)?
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Re: Treasury Yield Curve - June 3 2019

Post by moda0306 » Wed Jun 05, 2019 6:43 pm

Tortoise wrote:
Wed Jun 05, 2019 4:40 pm
Are the banks that currently offer 5-year CDs at 3% basically taking a loss on the CDs in order to hopefully attract new customers who will also sign up for lines of credit (from which the bank actually makes its money)?
My example was Ally, which doesn’t require a new account to get that rate. But you could still be right, though I thought banks usually used savings account and 1-2 year cd rates for that kind of stuff.
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Re: Treasury Yield Curve - June 3 2019

Post by whatchamacallit » Thu Aug 15, 2019 4:51 pm

30 year (1.98) is lower rate than 1 month (2.08) today
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Re: Treasury Yield Curve - June 3 2019

Post by Smith1776 » Thu Aug 15, 2019 8:27 pm

I hate to be "that guy" that starts making market/economic predictions of any kind. The PP is about conceding that we can't accurately predict the future.

Nonetheless, just for fun, I'd opine that the next few years in the global economy will likely be incredibly tumultuous and really test the mettle of traditional portfolios. Crazy things happening with interest rates, even in nominal terms. More global debt than ever before. A crazy President. A trade war. A tired economic expansion. Cyber warfare going on in both open and clandestine ways. Russian influence in the White House.

I'm actually kind of... how shall I say it... excited to see the PP have a chance to see what it can do.
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Re: Treasury Yield Curve - June 3 2019

Post by jhogue » Fri Aug 16, 2019 10:43 am

moda0306 wrote:
Wed Jun 05, 2019 6:43 pm
Tortoise wrote:
Wed Jun 05, 2019 4:40 pm
Are the banks that currently offer 5-year CDs at 3% basically taking a loss on the CDs in order to hopefully attract new customers who will also sign up for lines of credit (from which the bank actually makes its money)?
My example was Ally, which doesn’t require a new account to get that rate. But you could still be right, though I thought banks usually used savings account and 1-2 year cd rates for that kind of stuff.
Bankers don’t have to lose money to tempt you with a higher-rate CDs. That “hot” 5 year CD rate at 3% is doubtlessly covered when that same banker originates a mortgage loan at 4% or a maybe a HELOC at 5%.

I had the same question when my local banker recently dangled an 11 month CD @ 2.25% with the option to add or withdraw any amount up to the FDIC limit. When I asked him how he could beat the yield on a one year T-bill by 50 basis points, he replied succinctly: “It’s all about risk management.”
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Treasury Yield Curve - June 3 2019

Post by jhogue » Fri Aug 16, 2019 2:03 pm

jhogue wrote:
Fri Aug 16, 2019 10:43 am
moda0306 wrote:
Wed Jun 05, 2019 6:43 pm
Tortoise wrote:
Wed Jun 05, 2019 4:40 pm
Are the banks that currently offer 5-year CDs at 3% basically taking a loss on the CDs in order to hopefully attract new customers who will also sign up for lines of credit (from which the bank actually makes its money)?
My example was Ally, which doesn’t require a new account to get that rate. But you could still be right, though I thought banks usually used savings account and 1-2 year cd rates for that kind of stuff.
Bankers don’t have to lose money to tempt you with higher-rate CDs. That “hot” 5 year CD rate at 3% is doubtlessly covered when that same banker originates a mortgage loan at 4% or maybe a HELOC at 5%.

I had the same question when my local banker recently dangled an 11 month CD @ 2.25% with the option to add or withdraw any amount up to the FDIC limit. When I asked him how he could beat the yield on a one year T-bill by 50 basis points, he replied succinctly: “It’s all about risk management.”
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Treasury Yield Curve - June 3 2019

Post by Datura » Mon Sep 16, 2019 3:19 pm

Smith1776 wrote:
Thu Aug 15, 2019 8:27 pm
I hate to be "that guy" that starts making market/economic predictions of any kind. The PP is about conceding that we can't accurately predict the future.

Nonetheless, just for fun, I'd opine that the next few years in the global economy will likely be incredibly tumultuous and really test the mettle of traditional portfolios. Crazy things happening with interest rates, even in nominal terms. More global debt than ever before. A crazy President. A trade war. A tired economic expansion. Cyber warfare going on in both open and clandestine ways. Russian influence in the White House.

I'm actually kind of... how shall I say it... excited to see the PP have a chance to see what it can do.
Long time lurker - I couldn't help but register just to say, yes, I agree.

I thought I was a coolguy who could laugh at risk and volatility for max CAGR, but with geopolitics, bond markets and cyberwarfare, I feel like we're getting beyond some traditional wisdom. I can't feel good about riding into the storm unless my portfolio is antifragile. I guess I'm not that cool.
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Re: Treasury Yield Curve - June 3 2019

Post by Xan » Mon Sep 16, 2019 3:47 pm

Datura wrote:
Mon Sep 16, 2019 3:19 pm
Smith1776 wrote:
Thu Aug 15, 2019 8:27 pm
I hate to be "that guy" that starts making market/economic predictions of any kind. The PP is about conceding that we can't accurately predict the future.

Nonetheless, just for fun, I'd opine that the next few years in the global economy will likely be incredibly tumultuous and really test the mettle of traditional portfolios. Crazy things happening with interest rates, even in nominal terms. More global debt than ever before. A crazy President. A trade war. A tired economic expansion. Cyber warfare going on in both open and clandestine ways. Russian influence in the White House.

I'm actually kind of... how shall I say it... excited to see the PP have a chance to see what it can do.
Long time lurker - I couldn't help but register just to say, yes, I agree.

I thought I was a coolguy who could laugh at risk and volatility for max CAGR, but with geopolitics, bond markets and cyberwarfare, I feel like we're getting beyond some traditional wisdom. I can't feel good about riding into the storm unless my portfolio is antifragile. I guess I'm not that cool.
Antifragility is the new cool. At least around here...
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Re: Treasury Yield Curve - June 3 2019

Post by Smith1776 » Tue Sep 17, 2019 5:20 am

Datura wrote:
Mon Sep 16, 2019 3:19 pm
Smith1776 wrote:
Thu Aug 15, 2019 8:27 pm
I hate to be "that guy" that starts making market/economic predictions of any kind. The PP is about conceding that we can't accurately predict the future.

Nonetheless, just for fun, I'd opine that the next few years in the global economy will likely be incredibly tumultuous and really test the mettle of traditional portfolios. Crazy things happening with interest rates, even in nominal terms. More global debt than ever before. A crazy President. A trade war. A tired economic expansion. Cyber warfare going on in both open and clandestine ways. Russian influence in the White House.

I'm actually kind of... how shall I say it... excited to see the PP have a chance to see what it can do.
Long time lurker - I couldn't help but register just to say, yes, I agree.

I thought I was a coolguy who could laugh at risk and volatility for max CAGR, but with geopolitics, bond markets and cyberwarfare, I feel like we're getting beyond some traditional wisdom. I can't feel good about riding into the storm unless my portfolio is antifragile. I guess I'm not that cool.
We're on the same wavelength. I am, and always have been, an unusual fellow. I don't mean to say that I'm special, but I am definitely unusual.

As an example, I point out to many of my friends (at least those that work in finance), that the reason why diversification away from digital assets isn't preached, is simply because a major digital bomb on our wealth hasn't happened yet. There is a human tendency to reason by analogy rather than by first principles. When you reason by analogy you take something familiar and either transpose or extrapolate. In this case people extrapolate into the future, and don't realize that the fundamentals of wealth have changed.

Digitization is a common denominator. All of the risk "eggs" are in the digital basket. You are taking a massive risk by holding all of your wealth in this one form. When I try to point this out, people give me funny looks.

With the PP you get protection with having at least some of your gold holdings in physical form. It's the ultimate in anti-fragility. And that's why I like it.
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Re: Treasury Yield Curve - June 3 2019

Post by Datura » Tue Sep 24, 2019 1:17 pm

Today I've been reading a lot of articles this morning about negative ZIRP/NIRP and its potential consequences, and in short nobody knows what it will do long term, but everyone is doing it (including the USA soon, according to president Trump), and it's propping up the entire stock market and financial system at present, again with no exit strategy and unclear long term ramifications.

I have only the understanding of a well read amateur, but the fact that even experts in the field are extremely uncertain about it makes me extremely paranoid, to the point that I'm seriously considering making the switch in January. I have lots of plans in life and I don't want the social experiments of some random economist I've never heard of to get in the way.
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Re: Treasury Yield Curve - June 3 2019

Post by dualstow » Tue Sep 24, 2019 2:12 pm

Datura wrote:
Tue Sep 24, 2019 1:17 pm
.. I'm seriously considering making the switch in January.
Making the switch -- ❓
Feels like the end of the everything rally.
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Re: Treasury Yield Curve - June 3 2019

Post by ochotona » Tue Sep 24, 2019 2:46 pm

dualstow wrote:
Tue Sep 24, 2019 2:12 pm
Datura wrote:
Tue Sep 24, 2019 1:17 pm
.. I'm seriously considering making the switch in January.
Making the switch -- ❓
Switch to what???
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Re: Treasury Yield Curve - June 3 2019

Post by dualstow » Tue Sep 24, 2019 6:45 pm

Did datura answer, and then his post vanished? Or am i going nuts?
Feels like the end of the everything rally.
In Britain they have made burglary a safe occupation. It's like OSHA for burglars.
- Thomas Sowell on gun control
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Re: Treasury Yield Curve - June 3 2019

Post by ochotona » Tue Sep 24, 2019 6:57 pm

Gender switching?
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Re: Treasury Yield Curve - June 3 2019

Post by pugchief » Tue Sep 24, 2019 7:18 pm

dualstow wrote:
Tue Sep 24, 2019 6:45 pm
Did datura answer, and then his post vanished? Or am i going nuts?
It was there earlier. I read it. Something about transitioning from 33/33/33 Stocks/Bonds/REITs to a modified PP.
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Re: Treasury Yield Curve - June 3 2019

Post by dualstow » Tue Sep 24, 2019 8:03 pm

pugchief wrote:
Tue Sep 24, 2019 7:18 pm
dualstow wrote:
Tue Sep 24, 2019 6:45 pm
Did datura answer, and then his post vanished? Or am i going nuts?
It was there earlier. I read it. Something about transitioning from 33/33/33 Stocks/Bonds/REITs to a modified PP.
Ah yes, thank you. ‘Thirds’. I remember now.
Feels like the end of the everything rally.
In Britain they have made burglary a safe occupation. It's like OSHA for burglars.
- Thomas Sowell on gun control
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Re: Treasury Yield Curve - June 3 2019

Post by boglerdude » Tue Sep 24, 2019 9:52 pm

NIRP is good, means there's a savings glut. Japan/germany are rich countries with a high quality of life. Dont be mad cuz you cant have the risk free return that you used to get with high population growth

http://bilbo.economicoutlook.net/blog/?p=31715
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