14 replies to this topic

[Rogerdodger]

Wall Street’s Latest Obsession Is an Unknowable Number Signs that ‘term premium’ is driving up Treasury yields stir worry and doubt

 

20 year yield near 10 year high

 

https://stockcharts..../yieldcurve.php

 

 

Yield Curve & Black Swan signal? Started by Rogerdodger, 07 Sep 2023

The inversion of the yield curve has "incredible" predictive powers, and it is now telling investors that a global financial crisis 2.0 could hit the world economy in 2024, said George Gammon, an investor, macroeconomics expert, and host of the Rebel Capitalist Show.
"If you go back to the 1950s, you see that the inversion of the yield curve has incredible accuracy as far as its predictive power,"

 

Edited by Rogerdodger, 18 October 2023 - 10:16 AM.

[Douglas]

Rodgerdodger, the 20 year treasury bond rate is low historically (see plot below), that's why the stock market bears get shot every time they try to poke their furry little heads out of their hibernation caves.  The 20 year should provide 2.5 - 3% or so real yield above actual inflation rate, even more above the phoney baloney BLS numbers below.  Real 20 year yields are currently negative probably due to all the FED funny money still sloshing around in the system.  Assuming the FED gets control of inflation in a couple of years, the inflation average rate over the next 20 years is still going to be very optimistically something like 2.5 - 3% using their massaged calculation basis, probably 5 - 6% using the shadowstats.com 1980's basis calculation, that should easily justify a  6 - 7% 20 year treasury rate.  That means the current 20 year rate of 5.14% is still negative when adjusted for inflation by a couple of percentage points.   

 

Folks that are squealing about current high rates just don't have enough grey hair.  Rates have been in the past and should be now a lot higher.

 

 

Regards,

Douglas

Edited by Douglas, 18 October 2023 - 01:48 PM.

[Chilidawgz]

I think rates, 20-30, year continue higher. Government figures on inflation are fictitious trash,but, I think the main reason is this: For years the US government has been spending beyond it's means. They issued a butt load of paper short term instead of locking in low rates when it was available not too long ago. Now, rates are accelerating and that short term debt has to be rolled over at MUCH higher rates. Increasing the debt burden. The government cannot sustain these high rates on it's debt. Mostly though, we have burned most of our former sources for buying our government paper. The government is relying on an increased amount of issuance to be bought. The only way to get buyers to purchase their issuance is from higher rates. The game is over IMO and we are headed for some kind of reckoning IMO.

 

The money printing machine is not gonna work.

[Rogerdodger]

Mortgage rate hits 8%!

Demand falls to lowest level since 1995...

Real-Estate Commissions Could Be Next Fee on Chopping Block...

 

Was it 30 something years ago that I was thrilled to assume a 13% Non-Qualifying mortgage on a duplex rental for $5,000 cash & seller paid all closing costs!?

It paid for itself and paid for another home I eventually assumed for another $5,000 cash..

Of course I re-fied repeatedly as rates kept dropping.

 

Thankfully, my grand-daughter caught just under 3% on her new home, 2 years ago.

Edited by Rogerdodger, 18 October 2023 - 05:43 PM.

[12SPX]

It's nice you can lock in 30-year mortgages and makes sense why real estate is so quiet down there right now.  Up here things are going to hit the fan next year as up here you can get a 25 year mortgage but you have to adjust your rate every 5 years at max unless you have a variable rate which is way high right now.  Next year in my view is going to be terrible up here as people finally have to adjust and will be way over their heads in debt.....

[Rogerdodger]

My last re-fi was maybe a 20 year mort with 5 year variable.

It was on a rental property so it was a tax deduction.

I put money away, planning on a pay-off in 5 years.

But instead of the rate rising, it actually dropped! (2.5% maybe?

So I kept stashing away the cash in an interest bearing account in case something came along.

Eventually I just paid off the small balance.

But everyone was afraid of the possibility rates would skyrocket. They didn't.

Who knows the future?

Edited by Rogerdodger, 19 October 2023 - 09:37 AM.

[OEXCHAOS]

Mortgage rate hits 8%!

Demand falls to lowest level since 1995...

Real-Estate Commissions Could Be Next Fee on Chopping Block...

 

Was it 30 something years ago that I was thrilled to assume a 13% Non-Qualifying mortgage on a duplex rental for $5,000 cash & seller paid all closing costs!?

It paid for itself and paid for another home I eventually assumed for another $5,000 cash..

Of course I re-fied repeatedly as rates kept dropping.

 

Thankfully, my grand-daughter caught just under 3% on her new home, 2 years ago.

I didn't believe you on the 8%, but I checked with my bank and a no PMI, low cost 30 year is right at 8% APR. 2 1/2 years ago, that was just under 2.75%, IIRC.

 

That has to curb affordability.

[Rogerdodger]

WSJ: The Trusted 60-40 Investing Strategy Just Had Its Worst Year in Generations

Higher interest rates and inflation are upending millions of Americans’ retirement planning.

Wall Street’s boilerplate mix of stocks and bonds isn’t cutting it anymore.

 

Traditional portfolio = 60% stocks and 40% bonds

 

The iShares 20+ Year Treasury Bond ETF TLT posting a 12.2% loss on a total return basis this year through Tuesday,

 

Ten-year Treasury rates BX:TMUBMUSD10Y climbed on Tuesday to 4.846%, their highest level since July 2007 based on 3 p.m. Eastern Time levels, while the yield on 30-year Treasurys BX:TMUBMUSD30Y rose to 4.951% in its highest rate since August 2007, according to Dow Jones Market Data.

 

The INVERSE BOND TBT has done well!  $15 to $44 in 2 years!

https://schrts.co/bXDNkkxY

Edited by Rogerdodger, 19 October 2023 - 01:15 PM.

[OEXCHAOS]

Shorting the bonds totally offset the Bear market losses and then some.

 

M

[Chilidawgz]

Bonds continue their meltdown, absolutely amazing.

TLT down almost 2% today.

 

Treasury sell-off

 

Powell must be having a heart attack. So much ever expanding government debt that needs funding at accelerating rates.

 

Something is gonna break.

Edited by Chilidawgz, 19 October 2023 - 01:48 PM.