Bonds!

[John Hjorth]

16 hours ago, thepupil said:

Just what I have in my 401k, vanguard bond index, boring AF.

 

It is even good for your health  

[tede02]

Well, it looks like the yield party is coming to an end. It has been fun. Glad I locked in some treasuries and CDs north of 5% at a range of maturities. Most will come due over the next 3 years. Bond funds may still offer some opportunities. Total return is working again. Some of the funds I've looked yield over 5% and when you look at the underlying holdings, they average 90-95 of par. 

[gfp]

https://www.cnbc.com/2025/02/06/bessent-says-trump-is-focused-on-the-10-year-yield-wont-push-fed-to-cut-rates.html
 

this sounds to me like Bessent is going to deliberately cut down on supply of the 10 year for refunding to try to manipulate TNX lower.  Not sure that will work but you can bet each refunding announcement will be “benign” - lots of bills!

[wabuffo]

This sounds to me like Bessent is going to deliberately cut down on supply of the 10 year for refunding to try to manipulate TNX lower.  Not sure that will work but you can bet each refunding announcement will be “benign” - lots of bills!

 

Not gonna work.  But yield on 10-year is heading down now despite anything the US Treasury is doing because of the debt ceiling toggling back on on Jan 13th.  No net new issuance of Treasury securities, while deficit spending continues and US economy grows strongly (which needs more US Treasury securities).

 

Bill

[hasilp89]

14 minutes ago, wabuffo said:

This sounds to me like Bessent is going to deliberately cut down on supply of the 10 year for refunding to try to manipulate TNX lower.  Not sure that will work but you can bet each refunding announcement will be “benign” - lots of bills!

 

Not gonna work.  But yield on 10-year is heading down now despite anything the US Treasury is doing because of the debt ceiling toggling back on on Jan 13th.  No net new issuance of Treasury securities, while deficit spending continues and US economy grows strongly (which needs more US Treasury securities).

 

Bill

Bill, if deficit spending were to drop (big if, but say DOGE + higher tax receipts gets us to a balanced budget) economy was growing ok would you expect yields to drop based no need for net new issuance of treasuries (although in that case you'd think the treasury might refund with more notes than bills). I know its a weird hypothetical but trying to see if my understanding of how things work (I'm half way through Wray) is directionally correct.

[Red Lion]

Also a dumb question, but could the Treasury do its own quantitative easing without the Fed? Could it issue short term paper and buy 10 years in the open market to drive the yield down? 

[gfp]

I've finally gone and bought some TLT this morning.  

[Spooky]

On 2/12/2025 at 4:25 PM, gfp said:

I've finally gone and bought some TLT this morning.  

 

Would you share your rationale?

[gfp]

16 minutes ago, Spooky said:

 

Would you share your rationale?

 

I'm just a degenerate trader that needs to pay his bills and keep food on the table 

[TwoCitiesCapital]

On 2/12/2025 at 10:25 AM, gfp said:

I've finally gone and bought some TLT this morning.  

 

 

I sold out of my position about a month ago and replaced it with calls expiring in March. Upped the notional a bit, put a time limit on being right, and took cash out of the position to buy other things that have traditionally had strong seasonality at the moment. 

 

Fingers crossed for a pop by March. 

 

1 hour ago, Spooky said:

 

Would you share your rationale?

 

My rational is rates are attractive relative to inflation, have a good probability of being attractive relative to near/intermediate growth, and are heavily shorted....

[gfp]

Is today the day?  Or do rates shoot higher into the close?  [chart is TLT]

 

Edited 20 hours ago by gfp