3 ms·

A Roadmap for the Upcoming U.S. Treasury Bull Market

63 points by apo 8y ago

graedus 8y ago
An alternate view I've seen is to look at the last 30(+) years as a giant bull market in bonds that is slowly, finally, coming to a close[0][1] [0] https://www.bloomberg.com/news/articles/2018-01-10/is-the-30-year-bull-market-in-bonds-over https://www.bloomberg.com/news/articles/2018-01-10/is-the-30... [1] https://www.forbes.com/sites/adamsarhan/2016/11/16/is-the-30-year-bull-market-in-bonds-over-ray-dalio-other-hedge-fund-managers-think-so/#6ea5d7a01427 https://www.forbes.com/sites/adamsarhan/2016/11/16/is-the-30...
- rplst8 8y ago
  Maybe the market is whatever you want it to be depending on the zoom level. Like a giant fractal.
  - nosuchthing 8y ago
    The fractal TA theory was commissioned into an actual esoteric piece of software by Terence McKenna, called “Timewave Zero” https://youtube.com/watch?v=k9vkoDkeaVM https://youtube.com/watch?v=k9vkoDkeaVM
gammateam 8y ago
The crux of their argument is based around a trend line of yields, and correlating the approach of yields to that trend line with actual human behaviors. I think this is flawed. The only reason the trendline is sustained at this point is because feds rate went all the way to ZERO for almost 8 years. I don't think we have enough information to predict what the tolerable funds rate and treasury yields are. Assuming the 3% line is really going to spell doom and gloom for the market is reasonable, but not reasonable enough to extrapolate anything from it. Yes, if we get enough recessio where lending dries up and stocks crash, people worldwide will still rush to put their money in US Treasuries, resulting in a bull market for US treasuries. The favorable aspects of treasuries - which are LIQUIDITY and geopolitical position - have not been eclipsed by any asset since the last time US treasuries had these advantages over any other asset class.
outside1234 8y ago
This is dumb as rocks -- and probably written by someone trying to get out of a trade -- so buyer beware. It is clear that the driver to higher rates are endless and large deficits in the dollar, which going to lead to printing more dollars. It will end when the deficit shrinks or the yield rises to cover the expected inflation from these deficits.
- NTDF9 8y ago
  > It is clear that the driver to higher rates are endless and large deficits in the dollar, which going to lead to printing more dollars That only happens for the 2 yr fed fund rate. When the FED sees a sudden spike up or down in 2-yr rate, they buy the 2 yr bonds by printing to stabilize. But, if they do that for 10 yr rate, US will become like Japan with money fleeing the country because of expected inflation.
RyanShook 8y ago
Any good resources on understanding and using treasuries to complete a portfolio? Without leverage they look so unappealing today but I know they’re important.
purplezooey 8y ago
I saw a late night commercial the other day, it had Boone Pickens saying we should thank the Donald for our economy and watch out for the Millennial socialists who will bring it all down. It was almost a parody of itself.

63 points by apo 8y ago

An alternate view I've seen is to look at the last 30(+) years as a giant bull market in bonds that is slowly, finally, coming to a close[0][1] [0] https://www.bloomberg.com/news/articles/2018-01-10/is-the-30-year-bull-market-in-bonds-over https://www.bloomberg.com/news/articles/2018-01-10/is-the-30... [1] https://www.forbes.com/sites/adamsarhan/2016/11/16/is-the-30-year-bull-market-in-bonds-over-ray-dalio-other-hedge-fund-managers-think-so/#6ea5d7a01427 https://www.forbes.com/sites/adamsarhan/2016/11/16/is-the-30...

rplst8 8y ago
Maybe the market is whatever you want it to be depending on the zoom level. Like a giant fractal.
- nosuchthing 8y ago
  The fractal TA theory was commissioned into an actual esoteric piece of software by Terence McKenna, called “Timewave Zero” https://youtube.com/watch?v=k9vkoDkeaVM https://youtube.com/watch?v=k9vkoDkeaVM

gammateam 8y ago

The crux of their argument is based around a trend line of yields, and correlating the approach of yields to that trend line with actual human behaviors. I think this is flawed. The only reason the trendline is sustained at this point is because feds rate went all the way to ZERO for almost 8 years. I don't think we have enough information to predict what the tolerable funds rate and treasury yields are. Assuming the 3% line is really going to spell doom and gloom for the market is reasonable, but not reasonable enough to extrapolate anything from it. Yes, if we get enough recessio where lending dries up and stocks crash, people worldwide will still rush to put their money in US Treasuries, resulting in a bull market for US treasuries. The favorable aspects of treasuries - which are LIQUIDITY and geopolitical position - have not been eclipsed by any asset since the last time US treasuries had these advantages over any other asset class.

outside1234 8y ago

This is dumb as rocks -- and probably written by someone trying to get out of a trade -- so buyer beware. It is clear that the driver to higher rates are endless and large deficits in the dollar, which going to lead to printing more dollars. It will end when the deficit shrinks or the yield rises to cover the expected inflation from these deficits.

NTDF9 8y ago
> It is clear that the driver to higher rates are endless and large deficits in the dollar, which going to lead to printing more dollars That only happens for the 2 yr fed fund rate. When the FED sees a sudden spike up or down in 2-yr rate, they buy the 2 yr bonds by printing to stabilize. But, if they do that for 10 yr rate, US will become like Japan with money fleeing the country because of expected inflation.

RyanShook 8y ago

Any good resources on understanding and using treasuries to complete a portfolio? Without leverage they look so unappealing today but I know they’re important.

purplezooey 8y ago

I saw a late night commercial the other day, it had Boone Pickens saying we should thank the Donald for our economy and watch out for the Millennial socialists who will bring it all down. It was almost a parody of itself.