Gyroscopic Investing

Xan wrote: http://hosted.ap.org/dynamic/stories/E/ ... 9-10-45-53

Interesting. I've seen that in the U.S. that we've sold TIPS at a negative yield at auction. Wonder if this could happen to our short-term securities at some point. This also hints at a previous post which stated about positive convexity in the LT bond market and the volatility of the price as it reaches towards 0. If 0% is a floor for LT bonds then there can't be much price appreciation on interest rates lowering but price can go down if interest rates start going the other way.

This all starts falling apart however if the 0% isn't actually a floor but a trap door instead.

Germany hit a record for negative yields:

http://globaleconomicanalysis.blogspot. ... first.html

Germany: Germany sold 3.290 billion euros of six-month Treasury bills, known as Bubills, at an average yield of -0.0344%. The record lows was previously -0.0122% seen at an auction Jan. 9.

As long as inflation is low, then I believe this will happen with US (and Canadian) short term treasuries.  Welcome to the wonderful world of negative nominal interest rates.

Gosso wrote: Germany hit a record for negative yields:

http://globaleconomicanalysis.blogspot. ... first.html

Germany: Germany sold 3.290 billion euros of six-month Treasury bills, known as Bubills, at an average yield of -0.0344%. The record lows was previously -0.0122% seen at an auction Jan. 9.

As long as inflation is low, then I believe this will happen with US (and Canadian) short term treasuries.  Welcome to the wonderful world of negative nominal interest rates.

Perhaps a good time for EE bonds then for their phantom 3.5+% return after 20 years. Although come to think of it, Gosso, for Canadians do you guys have government savings bonds you can purchase and have them grow tax-deferred like the U.S.?

1NV35T0R wrote:

Gosso wrote: Germany hit a record for negative yields:

http://globaleconomicanalysis.blogspot. ... first.html

Germany: Germany sold 3.290 billion euros of six-month Treasury bills, known as Bubills, at an average yield of -0.0344%. The record lows was previously -0.0122% seen at an auction Jan. 9.

As long as inflation is low, then I believe this will happen with US (and Canadian) short term treasuries.  Welcome to the wonderful world of negative nominal interest rates.

Perhaps a good time for EE bonds then for their phantom 3.5+% return after 20 years. Although come to think of it, Gosso, for Canadians do you guys have government savings bonds you can purchase and have them grow tax-deferred like the U.S.?

No.  The Canadian Government fooks us over in regards to savings.  I use CDIC (same as FDIC) for the majority of my savings, plus some short term Canadian Government bonds.  It's not perfect, but I still sleep well.  Honestly, I'm looking for better ways to use my cash, it erks me to be placing my cash is instruments yielding negative real returns.  I might as well transfer it into cold hard cash, or take a trip to Vegas!

Gosso wrote:

1NV35T0R wrote:

Gosso wrote: Germany hit a record for negative yields:

http://globaleconomicanalysis.blogspot. ... first.html
As long as inflation is low, then I believe this will happen with US (and Canadian) short term treasuries.  Welcome to the wonderful world of negative nominal interest rates.

Perhaps a good time for EE bonds then for their phantom 3.5+% return after 20 years. Although come to think of it, Gosso, for Canadians do you guys have government savings bonds you can purchase and have them grow tax-deferred like the U.S.?

No.  The Canadian Government fooks us over in regards to savings.  I use CDIC (same as FDIC) for the majority of my savings, plus some short term Canadian Government bonds.  It's not perfect, but I still sleep well.  Honestly, I'm looking for better ways to use my cash, it erks me to be placing my cash is instruments yielding negative real returns.  I might as well transfer it into cold hard cash, or take a trip to Vegas!

Just pretend that any losses you have in Vegas would be the equivalent of a very short-term bond with a rather negative nominal yield.