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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    Interest Rates Up & Bonds Up?

    Lobo
    Lobo
    Lobo
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    Posts : 28411
    Join date : 2013-01-12
    • Post n°1

    Interest Rates Up & Bonds Up? Empty Interest Rates Up & Bonds Up?

    Post by Lobo Fri 26 May 2017, 2:40 pm

    Interest Rates Up & Bonds Up? UBCBT30-M-5-25-2017-1024x446
    While the Fed may be raising rates, there is still a flight to quality underway that is giving a bid to US Treasury issues. Low Treasury yields may remain the norm even if the Federal Reserve raises rates again. At about 2.25%, 10-year yields have dropped to 2017 lows, even with the central bank signaling an imminent rate hike. Many still see the stock market crash and that also supplies a bit of an underlying bid right now. However, The Fed has also made it clear it will maintain a gradual approach to shrinking its massive bond portfolio thereby reversing the Quantitative Easing. We are in never-never-land where the Fed tightening will not yet have a direct impact upon the bonds on a one-for-one relationship.
    Interest Rates Up & Bonds Up? UBCBT10-M-5-25-2017-1024x444
    When we compare the 10-year to the 30-year, we see strikingly different patterns. The high on the 30 year is 2016 in price (low in yield), whereas the high on the 10-year in price (low in yield) remains 2012.
    Interest Rates Up & Bonds Up? UB2YR-Rate-M-5-25-2017-1024x447
    Now look at the 2-year rate bottomed in September 2011 (high in price). Clearly, 2-year rates have been rising gradually for 6 years already.
    Interest Rates Up & Bonds Up? UBCBT30-Y-5-25-2017
    Now when we look at the 30-year on our Proprietary Perpetual 30 Year Contract back to 1798, we gain true perspective in how rates have performed in the long-term. We are clearly looking at a bond bubble, but the breaking point appears to be 2018. Because of the extreme flight to quality, we can still see a pop up in the 10-year before this is all over. This depends entirely upon the capital flows.
    https://www.armstrongeconomics.com/markets-by-sector/interest-rates/interest-rate-up-bond-up/
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