You need to learn the difference between; Treasury Bills, Treasury Notes and Treasury Bonds.
Do you not understand that American banks loaded up on low interest, long term T-bills a few years ago and that with the rapid and significant increase in what T-bills being issued recently are paying in interest, those old T-bills have depreciated significantly?
Here's a long macro thread from a year ago. This poster is one of the most generous and brave macro investor-predictors. Most won't want to put their guesses out there because of the inevitable howlers and mistakes. I mean you get 55% right in the macro world, you are a star.
Anyway, his predictions and how they turned out. I'm not completely sure I'm evaluating these correctly but maybe 55% chance I'm right so here we go.
Japanese yen will fall vs the USD. Interestingly, it soared for 3 months after this tweet...and then fell back as predicted. Most would have got stopped out, but the prediction was accurate over a year.
Swiss franc will rise vs the Euro. Been a lot of noise and chances to close this one out at both a win and a loss...I'll call it a draw.
UK rates will rise. I dunno. Most rates have risen but I don't feel like digging around to see if that is true in the UK. Probably. I'll call it a probable win.
So, three predictions and at some point each could have been closed at for a win. That's pretty good. Although I'm sure at some point point all three could have been closed out at a loss. So maybe we're measuring trading ability, not macro forecasting ability.
Another guy trying his hand at macro a year ago...guessed that higher mortgage rates would hurt home prices. Well...for a few months they did, but now we have even higher mortgage rates and home prices have surged back to higher now than when the tweet came out a year ago. So, again, depends where you closed the short housing trade. Strength of housing here is pretty amazing.
Do you not understand that American banks loaded up on low interest, long term T-bills a few years ago and that with the rapid and significant increase in what T-bills being issued recently are paying in interest, those old T-bills have depreciated significantly?
Hot off the chatGPT presses: Types of Treasuries: There are several types of US Treasuries, including Treasury bills (T-bills), Treasury notes (T-notes), and Treasury bonds (T-bonds). The main difference between them is their maturity periods: T-bills: Short-term securities with maturities ranging from a few days to one year. T-notes: Medium-term securities with maturities typically ranging from 2 to 10 years. T-bonds: Long-term securities with maturities exceeding 10 years, often up to 30 years.
Hoping this is just more seasonal stuff. September has been historically the worst month for stocks and October is much better. But with these interest rates grinding higher and higher...hard get constructive until that stops.
Reducing TECS and SOXS up 19% and 26%, plowing proceeds into EMD and FAX down on rising dollar, yields 12% and 13%, discounts higher than yearly average.
Hot off the chatGPT presses: Types of Treasuries: There are several types of US Treasuries, including Treasury bills (T-bills), Treasury notes (T-notes), and Treasury bonds (T-bonds). The main difference between them is their maturity periods: T-bills: Short-term securities with maturities ranging from a few days to one year. T-notes: Medium-term securities with maturities typically ranging from 2 to 10 years. T-bonds: Long-term securities with maturities exceeding 10 years, often up to 30 years.
… with these interest rates grinding higher and higher...hard get constructive until that stops.
Would you believe me if I told you that 1 and 5 year changes in SP500 are COMPLETELY uncorrelated with the US Fed funds rate, at least if we look at monthly data from 1954 onward?
… with these interest rates grinding higher and higher...hard get constructive until that stops.
Would you believe me if I told you that 1 and 5 year changes in SP500 are COMPLETELY uncorrelated with the US Fed funds rate, at least if we look at monthly data from 1954 onward?
yeah I would believe you, longer term. The whole 'don't fight the fed' thing is a myth.
But I'd also say that on a day to day basis the market will react negatively to things like another day of grindingly high interest rates. Longer term is different, as you say.
The bond king, a year ago. I guess he did ok...intermediate treasury bonds made 1% since the tweet. hard to get excited about a 1% return, but it's in the positive so he passes.
Jeffrey Gundlach @TruthGundlach The U.S. Treasury Bond market is rallying tonight. Been a long time. I have been a buyer recently. 12:14 AM · Sep 27, 2022