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It might be a bet that interest rates drop this year, and you can sell the bonds for more in 12 months. You're not too concerned with what happens after that.
by dehrmann 3y ago
It might be a bet that interest rates drop this year, and you can sell the bonds for more in 12 months. You're not too concerned with what happens after that.
- ta988 3y agoSounds like a dangerous bet to make in a really tense year politically.
- dehrmann 3y agoConventional wisdom is the tension leads to lower interest rates. War in the Middle East? Lower rates. Stumbling economy in an election year? Lower rates. The Fed watches neither of those metrics; they watch inflation and unemployment, so I wouldn't actually make this bet, but it's a story people like to tell.
- ta988 3y agoThey take more than that into account see https://en.m.wikipedia.org/wiki/Federal_Open_Market_Committee https://en.m.wikipedia.org/wiki/Federal_Open_Market_Committe...