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The rates markets (bonds) have had historic 6-month declines. And other debt instruments price off of these. Not sure the economic fallout has been fully felt
by HFguy 4y ago
The rates markets (bonds) have had historic 6-month declines.
And other debt instruments price off of these. Not sure the economic fallout has been fully felt yet.
To compare to other periods, gov debt instruments increased in value during 2000, 2008 and 2020.
- dragontamer 4y agoYou've got it backwards. When rates go up, bonds become more useful as an investment. When the 1-year US Treasury was yielding 0.2% earlier this year, it was a bad idea to buy 1Y treasuries (and most other treasuries). Today, the 1Y is 2.87%, and suddenly a whole slew of investors just won't want to invest into shady high-risk companies anymore (Hey look, US Treasuries are yielding good values again. Lets buy those instead). The people who did buy 0.2% 1Y treasuries earlier this year (or worse, 10Y or 30Y treasuries) have lost a lot of value due to these higher interest rates. ------- Case in point: the 1Y US Bond is literally a better rate than my 15Y mortgage. It makes more sense to buy 1Y bonds than for me to pay off my mortgage right now (ignoring tax issues of course)