Wednesday, May 30, 2012

Forbes: Record-Low Treasury Yields A Harbinger Of Coming Bond Market Collapse


Story at Forbes here.  Oh brother.

I guess their economic insight is based on "what goes up must come down".

19 comments:

Tom Hickey said...

Record low yields are the sign of economic collapse. Morons.

y said...

Couldn't bond prices fall sharply if the Fed allows them to?

Greg said...

ONLY if Fed allows them to

paul said...

"…Record low yields are the sign of economic collapse…"

But, but…

Record high yields are a sign of economic collapse also.

What is a bond trader to do?

Tom Hickey said...

"What is a bond trader to do?"

All bond traders are interested in is volatility and the direction is immaterial. Bond traders trade both sides of the market. That's how leveraged trading works.

Savers, that's another matter.

Anonymous said...

A trader must buy the dips right now, and sell high, because is worthless to stick to them with negative yields.

The uptrend is just too strong, any contrarian bet will obliterate your capital.

In other news, I don't know what this nonsense is about, hyperinflation calls? And oil has fallen >3% (is going below 70 USD probably).

y said...

"ONLY if Fed allows them to"

Is there any guarantee that it won't? We shouldn't confuse what the Fed can do with what it will do.

paul said...

"Savers, that's another matter."

We were kind of expecting deflation weren't we?

Tom Hickey said...

"The uptrend is just too strong, any contrarian bet will obliterate your capital."

Not the position of bond traders I know, who successfully play both sides of the market now, generally trading interday based on changes in momo.

Tom Hickey said...

"We shouldn't confuse what the Fed can do with what it will do."

Anticipating what the Fed is likely to do is what "expectations" is all about.

Tom Hickey said...

"We were kind of expecting deflation weren't we?"

That's why portfolio managers lightened up on tsys and moved into other asset classes that promised to do better, like equities and commodities, which they expected to be driven up by QE (cheap leverage).

Anonymous said...

Yeah well, you can trade on the downside short term, if that's how you trade.

Personally, I don't like to play against the main trend when is so strong, not worth the risk, have the stock market for that.

Geoff said...

Tom,

Bond traders may be having fun, but bond managers responsible for pension funds and insurance company portfolios are going crazy.

Roger Erickson said...

"Record low political intelligence a harbinger of coming aggregate outcome collapse."

Is there a google-translation page for translating implications between jargons?

Mike Norman said...

Forbes is total garbage. An ideological rag sheet masquerading as meaningful information.

Mike Norman said...

The bond market has eviscerated every single pundit who has made this call and will continue to do so until they are all out of money. It's so enjoyable to watch!

Tom Hickey said...

"Bond traders may be having fun, but bond managers responsible for pension funds and insurance company portfolios are going crazy."

Right, they are savers or agent for savers.

Bond traders either trade their own account or manage high-risk trading accounts. Most people associate tsys with saving, but they are a popular trading vehicle due to the leverage available that makes a few pips worth taking.

y said...

Mike,

To be fair, Forbes (online) does also feature the work of John T. Harvey, who is pretty close to MMT.

http://www.forbes.com/sites/johntharvey/2011/05/14/money-growth-does-not-cause-inflation/

Detroit Dan said...

Reminds of the classic blunder by Black Swan author Nassim Taleb in February 2010 --

It’s “a no brainer” to sell short Treasuries, Taleb, a principal at Universa Investments LP in Santa Monica, California, said at a conference in Moscow today. “Every single human being should have that trade.”

Largely because of my knowledge of MMT, I was heavily invested in U.S. Treasuries at the time and I still am. Treasuries have soared since then as interest rates have continued to plummet. One of the worst calls ever...