Bonds!

[Gregmal]

3 minutes ago, Spekulatius said:

Current situation reminds me more and more of Liz Truss mini budget:

https://www.crfb.org/blogs/americas-truss-moment

Eh looks like another dishonest POS…what gave it away? First paragraph;

 

“Since the beginning of the month, the 10-year Treasury yield has increased by roughly 30 basis points, from 4.2 to 4.5 percent.”

 

….LOL ok…and?

 

Then followed immediately by this deliberate gem;

 

“Yields are almost a percentage point higher than they were late last summer.“

 

Huh? What a strange timeline! Why or how did the sleezo decide on this? Simple enough, because if he used the more generally accepted year over year comparison…he’d have a big ole UNCH! Kinda kills the hysteria if we’re honest….

[james22]

14 minutes ago, Gregmal said:

You’re kidding yourself thinking some internal genius of yours(that still has you stuck at a desk BTW) is gonna trade yourself into a faster retirement . . .

 

It's a very specific kind of genius, that.

[james22]

18 minutes ago, Gregmal said:

You’re kidding yourself thinking some internal genius of yours(that still has you stuck at a desk BTW) is gonna trade yourself into a faster retirement . . .

 

Seriously, unless you've already made millions trading or somehow convinced a hedge fund to hire you, at 23 you've no reason to claim much of anything, much less genius.

[hasilp89]

37 minutes ago, wabuffo said:

not sure who the natural buyer is for it

@gfp is!

[Spekulatius]

33 minutes ago, Gregmal said:

Eh looks like another dishonest POS…what gave it away? First paragraph;

 

“Since the beginning of the month, the 10-year Treasury yield has increased by roughly 30 basis points, from 4.2 to 4.5 percent.”

 

….LOL ok…and?

 

Then followed immediately by this deliberate gem;

 

“Yields are almost a percentage point higher than they were late last summer.“

 

Huh? What a strange timeline! Why or how did the sleezo decide on this? Simple enough, because if he used the more generally accepted year over year comparison…he’d have a big ole UNCH! Kinda kills the hysteria if we’re honest….

The qualitative factors are the same.

Expansionary budget is released by new government while also cutting taxes. prior to this self inflicted upheaved has unsettled markets.

 

Bond yield are going up while at the same point currency is going down. Bond yield are basically a vote on confidence, so the current admin basically is getting a yellow card in soccer lingo.

 

we are one step closer to fiscal dominance which is what happened in the UK in 2022. We probably don’t get there but it’s more likely than it was a couple of month ago.

[Dalal.Holdings]

We should clearly just assume that nothing can go wrong and continue on this unprecedented fiscal path (record peacetime + full employment deficits) because it makes so much sense since we are a reserve currency and preeminent power

 

Let’s just put it all on black and see what happens, amirite ?

[Cigarbutt]

13 hours ago, Ice77 said:

It is usually overlooked (for obvious reasons) that all that was possible because manufacturing everywhere else (Germany/UK/Japan) had been practically decimated by WW2 to the extent that 70-80% of intact manufacturing was only left in one place, US and it would take a few decades for that edge to go away. Add Marshall plan to the mix (US had a lot of money back then to rebuild a destroyed Europe) and you have those great wage growth numbers from the 50s/60s. 

Ok but this phenomenon (net total debt to GDP going down with major public debt deleveraging more than compensating steady growth of private debt starting from a low level) happened not only in the US but in most or all developed economies.

Isn't it interesting that the 1970s' inflation episode happened when public debt to GDP was reaching record lows?

And the setup now is very different from a debt "repair" perspective.

[Blake Hampton]

 

[Hektor]

16 hours ago, gfp said:

 

And a couple fills on ZROZ as well

@gfp Why is 5% the magic number? Asking to understand. Thanks.

[Marco Van Basten]

2 hours ago, Blake Hampton said:

 

And yet, if you asked Jamie how does his portfolio look like, I bet you he has more than 70% of his net worth in equities, and almost nothing in gold and cash.  

[Gregmal]

57 minutes ago, Hektor said:

@gfp Why is 5% the magic number? Asking to understand. Thanks.

Seems like everything is a magic number with bonds. 4.5%as we ve seen here, this morning saw 4.61% as a headline. So much important stuff here to consider 

[Intelligent_Investor]

6 minutes ago, Marco Van Basten said:

And yet, if you asked Jamie how does his portfolio look like, I bet you he has more than 70% of his net worth in equities, and almost nothing in gold and cash.  

Yup. He's a banker. Its quite literally his job to be pessimistic lol. You don't want an optimistic banker.

[wabuffo]

Current situation reminds me more and more of Liz Truss mini budget:

 

Y'all have to be careful with the big numbers being thrown around in terms of the budget impact of this "big, beautiful" tax bill.

 

The projected pro-forma deficit numbers presume that all of the 2017 individual tax cuts expire for a nanosecond, this establishes a new baseline for the bill and then get cut again (even though they are not in effect now).   This "restores" $3.4 - $4.6 trillion in revenue which is totally fictitious and then adds this "lost revenue" to the fiscal impact of the bill.  It makes no sense but this how the bill is scored.

 

The real impact is closer to $1.8 trillion over 10 years = which is $180B per year.  Not great - but not the disaster the bond vigilantes/inflationistas are heavy breathing about right now.

 

I am not a fan of the overall bill - but there's some good stuff in there and overall pretty bullish for the US economy.  If we could just put this tariff nonsense behind us - it will continue the path of the Roaring 20's v2.0 the US is currently on.

 

Bill

Edited May 22, 2025 by wabuffo

[cubsfan]

2 minutes ago, cubsfan said:

^^^ Much appreciated.

 

This "restores" $3.4 - $4.6 trillion in revenue which is totally fictitious and then adds this "lost revenue" to the fiscal impact of the bill.  It makes no sense but this how the bill is scored."

 

Easy to get confused by this stuff. 

[Gregmal]

This is what they do. Theyre either "confused" when they run their mouths about this, or plainly dishonest. Either way, why even pay attention to what they have to say anymore? Haven't we learned by now?

[cubsfan]

58 minutes ago, Gregmal said:

This is what they do. Theyre either "confused" when they run their mouths about this, or plainly dishonest. Either way, why even pay attention to what they have to say anymore? Haven't we learned by now?

 

yeah, good point. I'm not that smart, but this particular thread clears up some of the mystery around what's happening.

[Gregmal]

37 minutes ago, cubsfan said:

 

yeah, good point. I'm not that smart, but this particular thread clears up some of the mystery around what's happening.

You don’t really need to be that smart; it’s just pattern recognition and behavioral. It was the same thing these losers did with and still kinda do with inflation. Trying so desperately to convince you half a percent or heck even one tenth of one percent in this direction or that is this super big huge deal with has gargantuan implications. Similar stuff they pulled during Covid with various data. All you gotta do is see the agenda and fine tune the way you process it.

[KJP]

Any scoring method needs a comparator to measure against.  @wabuffo is arguing for "current baseline" as the relevant comparator, while the Democrats are arguing the comparator should be current law if no changes are made -- i.e., the world in which certain tax cuts expire, among other things.  (Of course, that comparator favors the Democrats' current position, so they naturally are using it -- I'm not suggesting one party is more pure than the other.)  To the extent deficits matter, then both comparators provide useful information.  

 

@wabuffo Other than making various TCJA tax cuts permanent, what do you like best and dislike the most about the bill?

 

The implementation of some of the changes, if they are ultimately enacted, will be interesting.  For example, if a restaurant adds a mandatory 20% "tip" to your check, is that tax exempt?  How about if your lawn service or auto mechanic does that? 

 

 

Edited May 22, 2025 by KJP

[Dalal.Holdings]

5 hours ago, wabuffo said:

Current situation reminds me more and more of Liz Truss mini budget:

 

Y'all have to be careful with the big numbers being thrown around in terms of the budget impact of this "big, beautiful" tax bill.

 

The projected pro-forma deficit numbers presume that all of the 2017 individual tax cuts expire for a nanosecond, this establishes a new baseline for the bill and then get cut again (even though they are not in effect now).   This "restores" $3.4 - $4.6 trillion in revenue which is totally fictitious and then adds this "lost revenue" to the fiscal impact of the bill.  It makes no sense but this how the bill is scored.

 

The real impact is closer to $1.8 trillion over 10 years = which is $180B per year.  Not great - but not the disaster the bond vigilantes/inflationistas are heavy breathing about right now.

 

I am not a fan of the overall bill - but there's some good stuff in there and overall pretty bullish for the US economy.  If we could just put this tariff nonsense behind us - it will continue the path of the Roaring 20's v2.0 the US is currently on.

 

Bill

 

So all is good because we are largely continuing a level of spending that was implemented during a global pandemic which has long since concluded ? It would be like if WW2 spending continued after 1945...

 

7% of GDP is 7% of GDP and is largely unprecedented in peacetime with full employment

 

Let's also wait until the Senate manhandles the bill and adds some more goodies to it

[cubsfan]

3 hours ago, Gregmal said:

You don’t really need to be that smart; it’s just pattern recognition and behavioral. It was the same thing these losers did with and still kinda do with inflation. Trying so desperately to convince you half a percent or heck even one tenth of one percent in this direction or that is this super big huge deal with has gargantuan implications. Similar stuff they pulled during Covid with various data. All you gotta do is see the agenda and fine tune the way you process it.

 

 

If that is what's required, I will be just fine. The news flow makes it seem like armageddon, but some of the posters here are very reassuring, as you are. Just trying to understand the mismatch, and my knowledge of the bond market is not one of my strengths. But as you say, I'm always mystified how  

1/2% freaks everyone out.

 

[wabuffo]

7% of GDP is 7% of GDP and is largely unprecedented in peacetime with full employment

 

Its now running at 5.4% of GDP  (US GDP = $30.5T).  A booming economy is bring it down because of rising tax receipts.

 

But who's counting, yah?

 

[Blake Hampton]

 

Monthly Treasury Statement (MTS)

 

Edited May 22, 2025 by Blake Hampton

[Dalal.Holdings]

28 minutes ago, wabuffo said:

7% of GDP is 7% of GDP and is largely unprecedented in peacetime with full employment

 

Its now running at 5.4% of GDP  (US GDP = $30.5T).  A booming economy is bring it down because of rising tax receipts.

 

But who's counting, yah?

 

 

Well, in the long run I hope you're right and I'm wrong

[Marco Van Basten]

25 minutes ago, wabuffo said:

7% of GDP is 7% of GDP and is largely unprecedented in peacetime with full employment

 

Its now running at 5.4% of GDP  (US GDP = $30.5T).  A booming economy is bring it down because of rising tax receipts.

 

But who's counting, yah?

 

It should decline further as student loans start getting repaid, including interest, and savings from things like terminating USAID start flowing through.  Additionally, taxes on foundations and endowments should also start reducing deficits although that may all be given back in the tax bill.  Lastly, Medicaid work requirements may force 8MM adults into the labor force, that should generate $500bn+ in GDP potentially, and say $100bn in federal taxes and tens of billions in Medicaid savings.  

[dwy000]

1 minute ago, Marco Van Basten said:

It should decline further as student loans start getting repaid, including interest, and savings from things like terminating USAID start flowing through.  Additionally, taxes on foundations and endowments should also start reducing deficits although that may all be given back in the tax bill.  Lastly, Medicaid work requirements may force 8MM adults into the labor force, that should generate $500bn+ in GDP potentially, and say $100bn in federal taxes and tens of billions in Medicaid savings.  

USAID actual reductions (most of the DOGE stuff) is not all that meaningful.  There's no change in taxation on foundations and endowments (that can't be done by executive order).  Medicaid changes don't kick in for 2-3 years.