Whelp, its coming

Microsoft 🎃PSL🎃
Sep 1 8 Comments

The yield curve is approaching true, big-time inversion (10 year and 3 month treasury yields are already flipped, and now the 10 and the 2 year are bouncing between inverted and equal)

What does this mean:
Big money investors are stocking up on long-term treasuries (basically cash), and would rather lock in 10 years of mediocre interest than buy a 2 year bond with the same annual yield. This means people are okay getting paid the same despite less flexibility, presumably because they don’t want to have to renew their investment with whatever is available at the end of those 2 years. Ditto for 3 month treasuries, but even more pessimistic.

Basically, many people with $$$ are parking cash and waiting for the bubble to burst 3 months to 2 years from now (they can sell long bonds whenever, and they grow in value as rates drop).

Thing is, what can a regular person do with this info? Bump up my bond holdings? A bet like that is boring, and honestly, can only preserve (part of) my savings (not grow it!).

Also, is everyone just presuming the Fed will QE our asses harder, we dive into negative rates, and all existing assumptions are dead? In such a case, I guess I’d keep my current stock allocation (and never buy a house as assets infinitely appreciate 😢)

[0]: https://fred.stlouisfed.org/series/T10Y3M
[1]: https://fred.stlouisfed.org/graph/?g=lFt2

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TOP 8 Comments
  • New death++
    Negative interest rates will be the only way to salvage stock and housing markets.
    Sep 1 4
    • Lime hg1sb3
      Salvaging the housing market for the boomers will mean screwing the housing market for gen X and millennials. At a certain point the whole thing becomes too unaffordable and the fed won't be able to prevent the bubble from popping.
      Sep 1
    • New / R&D han5grüber
      Fucking boomers, they shit all over this country for too long.
      Sep 2
    • Intel D’s🥜
      We won’t see negative interest rates. We couldn’t handle that deficit
      Sep 3
    • New / Eng ©️➕➕
      Negative interest rates will make it easier to repay US debt. It will mean debt vanishes over time.
      Sep 3
  • Medallia qwertyca
    Perishable currency is way of future.
    Sep 2 1
    • Lime hg1sb3
      Bad advice that lots of people have lost a lot of money on
      Sep 2
  • Intel D’s🥜
    OP, you raise a good point that a bunch of money managers want the answer to - how do I grow investments during a Recession?

    The only real way to do that is to buy cheap capital (land, buildings) during the downturn. It’s both time specific and substance specific ( which investment/house/land) so the odds are not great.
    Sep 3 0

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