Whither bonds? .

[onenote]

Maybe…

Bond Vigilantes Awaken As Inflation Becomes Embedded

[xerty]

Higher for longer starts to get priced in.

[onenote]

Huge run up in bond prices (drop in interest rates) today. The 10 year bond interest dropped from about 3.95% to 3.70%. TLT, the 20 year treasury bond ETF, is up about 3.5% today.

[xerty]

this was supposed to be useful for Fidelity users wanting to buy treasuries, given treasuries are very competitive with other “cash” but not quite so risk-free things like banks

How To Buy Treasury Bills, Treasury Notes, Treasury Bonds | Fidelity & TreasuryDirect (Step By Step)

[onenote]

@xerty

this was supposed to be useful for Fidelity users wanting to buy treasuries

It is too wordy for my taste, but I suppose it’s useful if you’re a beginner.

Here’s another explanation that’s more direct

How To Buy Treasury Bills & Notes Without Fee at Online Brokers

[onenote]

The four week treasury bill rate for today’s May 11, 2023 auction was 5.723%

https://www.treasurydirect.gov/auctions/announcements-data-results/

[onenote]

It looks like the bond market is predicting low inflation.

5-year TIPS reopening gets real yield of 1.832%, highest in 14 years

Despite a huge US government deficit

The Budget and Economic Outlook: 2023 to 2033

[onenote]

According to this article, the treasury will increase its issuance of bills and bonds. Investors should factor this into to their buying plan as their holdings roll over. I continue to hold a lot of short term bills.

https://finance.yahoo.com/news/traders-brace-102-billion-wave-100001923.html

“There’s just a lot of supply coming,” said Mark Cabana, head of US interest-rate strategy at Bank of America Corp. “We’ve been surprised by the deficit numbers, which are sobering.”

Larger amounts of debt issuance haven’t translated directly into lower prices and higher yields, as the swelling in US debt alongside historically low yields attests over the past two decades. But bigger auction sizes contribute to the potential for short-term volatility, at a time when banks have diminished appetites for market making. That was on display in a seven-year auction on Thursday that saw buyers demand a bigger discount to absorb the securities.

What has sent yields higher is Fed rate hikes and inflation, a key dynamic widening the budget deficit. The cost of servicing US government debt jumped by 25% in the first nine months of the fiscal year, reaching $652 billion — part of a global phenomenon propelling public borrowing.

Cabana and his team forecast the Treasury will bump up sales of coupon-bearing debt — as notes that pay interest are known — not only this month, but again in the November and February debt-management policy announcements.

[sullim4]

This is exactly the consequence we were talking about when the fed started their campaign on interest rates.

At some point, the cost of debt service is going to balloon and the fed will have no choice but to pause rate hikes. Perhaps we are at that point now.

[pattyb53]

Was this the last time we had a posting from shinobi? It was when you guys were all involved with bonds.

To bad, never heard another word from him.

[onenote]

@sullim4

At some point, the cost of debt service is going to balloon and the fed will have no choice but to pause rate hikes. Perhaps we are at that point now.

Regardless of the interest rate, the United States budget deficit is skyrocketing.

The federal deficit nearly tripled, raising concern about the country's finances

The Treasury Department said Thursday that the budget gap from October through June was nearly $1.4 trillion — a 170% increase from the same period a year earlier. The federal government operates under a fiscal year that begins October 1.

[harish7631]

@onenote

Regardless of the interest rate, the United States budget deficit is skyrocketing.

This downgrade should get somebody’s attention…

https://www.cnn.com/2023/08/01/business/fitch-downgrade-us-debt/index.html

[sullim4]

@pattyb53

Was this the last time we had a posting from shinobi? It was when you guys were all involved with bonds.

To bad, never heard another word from him.

As was mentioned in the other thread, you can get your daily dose of Shinobi/Kaight over on Ken’s site. For example: https://www.depositaccounts.com/community/ask/54275-question-alliant-credit-union-help.html

That is a question you can help him out with, Patty!

[pattyb53]

I tried to respond but I’m not a member of Ken’s site and it’s too much trouble to join. But I think you’re right that kaight sure writes like shinobi. Also all the questions about Alliant CU, it’s got to be shinobi…

Makes me wonder if they are actually the same person why the “sign off” on fragiledeal.
Who knows!!

[Honkinggoose]

@harish7631

This downgrade should get somebody’s attention…

It should, but what are the odds that CNN, PMSNCB, or any other mainstream media, including financial media, will lead with this. You’re right that it is a big deal and should be big story. Sadly, it won’t be on 90% of the news sources that most Americans see.

@harish7631

citing “a steady deterioration in standards of governance,” such as the country’s repeated impasses over the debt ceiling.

Is it just me, or do those two things seem at odds with each other?

[harish7631]

@Honkinggoose

Is it just me, or do those two things seem at odds with each other?

Debt, i.e. government largesse with money raining for anything and everything, is being used to keep the economy firing on all cylinders. Eventually the punch bowl will be removed, but not before the next election cycle.

[xerty]

US credit rating downgraded to AA+ from AAA, citing higher debt costs, higher spending, and idiot politicians.

https://www.fitchratings.com/research/sovereigns/fitch-downgrades-united-states-long-term-ratings-to-aa-from-aaa-outlook-stable-01-08-2023

[onenote]

@xerty

US credit rating downgraded to AA+ from AAA,

I am not seeing any large effect. Interest rates are about the same. The Standard & Poor’s 500 dropped a little over 1% but it has been going up and it was due for a correction. Also, the jobs report came in with a large increase and, in today’s upside down market, that’s not good news because it means the Fed will not cut rates.

[onenote]

JPMorgan CEO Jamie Dimon calls Fitch Ratings U.S. downgrade 'ridiculous' but...

• The Fitch Ratings downgrade of the United States’ long-term credit rating ultimately doesn’t matter, JPMorgan Chase CEO Jamie Dimon told CNBC on Wednesday.
• “It doesn’t really matter that much,” because it’s the market, not rating agencies, that determines borrowing costs, Dimon told CNBC’s Leslie Picker.
• Still, it is “ridiculous” that other countries are rated higher than the U.S. when they depend on the stability created by the U.S. and its military, Dimon added.

[Honkinggoose]

@onenote

I am not seeing any large effect. Interest rates are about the same.

Effects won’t be seen until governments start thinking the USD is not the reserve currency of the world. There have been attempts by the Chinese to denominate transactions in currencies other than the USD, but most have been small potatoes, or had derivatives tied to the USD.