Just three short weeks ago, when Guy Haselmann issued this call, the yield on the 30Y was 2.61%. We're already halfway to his predicted destination...
Hedge funds are still massively short US Treasuries and are getting their faces ripped off in this rally. (You witnessed some of them unwinding their short bets today.) By the way, if you had just bought some TLT the day you started posting on this message board in late November, you'd be up 13% by now.
I hope you're kidding - SBND is an excellent way to lose your money three times as fast. The long bond is headed to the sub-2% range, and rates will likely linger there for a very long time. In Lacy Hunt's colorful terminology, there won't be a V-shaped recovery in rates - it will be an L-shape with a soggy bottom.
A former bond trader, he's the only talking head on CNBC who understands the bond market and makes any sense. He's been suggesting that long-term Treasury yields would drop even further for months.
You’ve been wrong regarding the direction of interest rates for over 12 months now. Do you ever stop to consider that perhaps your investment thesis is fundamentally flawed?
I'd be surprised if they even did a symbolic, one-time increase this year, but I agree that it doesn't matter what they do as it relates to long-term rates.
The bond market is predicting the Japanization of the US and another lost decade. Rates will likely fall even further.
You're correct, it makes no sense for Spanish or Italian 10Y bonds to be yielding so much less than US bonds, which is why it's probably unsustainable (US rates will likely continue to fall as yield-seeking investors eventually rotate from Euro bonds into US Treasuries) . Those two countries in particular are economic basket cases, but speculators are currently front-running the future bond purchases by European central banks.
Primarily insurance companies and pension funds . All institutions with liability structures that require matched asset hedging require fixed income assets on the other side of their balance sheet. And due to the Budget Act of 2013, pension funds are now required to hold more “high quality collateral”, defined as 10-year bond equivalents (US Treasuries with maturities of over 10 years). There’s a shortage of such high quality collateral because the Fed bought so much of it, which is one reason (there are many others) there’s such a relentless bid for long-term bonds
I meant that it was a win for Yahoo shareholders who wanted to sell their Alibaba stake, and for those who wished to keep it. Now they have a choice. It's probably good for Alibaba, too, in that Yahoo will not be dumping a huge number of BABA shares on the market. The holding company will continue to hold those shares, and sellers will be selling SpinCo shares, not BABA shares.
Some activist shareholders wanted Yahoo to sell its Alibaba stake and pass the proceeds on to shareholders (because they felt the value of the Alibaba shares was obscuring what they think is the value of Yahoo as an operating company). Yahoo would have incurred a huge tax liability by following that strategy, though. By spinning the shares off into a new holding company (shares of which will be distributed to Yahoo shareholders on a pro-rated basis), Yahoo avoids the tax hit, and the activist investors who wanted Yahoo to sell Alibaba shares can achieve the same result by selling shares of the spinoff company (and they will be the ones who incur a tax on the sale). It sounds like it's a win-win for everyone.
So if a Yahoo shareholder decides to sell his SpinCo shares, will that in itself be a taxable event? Or only if it exceeds the investor's original investment in Yahoo? And I suppose those who are bullish on Alibaba's business can just hold on and it will essentially be like holding BABA shares?
Now you're starting to catch on. Zero Hedge, by the way, has been bullish on long-term Treasurys for the past 18 months. If you had taken their advice and purchased 30Y Treasurys in the fall of 2013, you'd be sitting on gains of around 35-40% right now...
That article is from 4 years ago, LOL. Where is the inflation now? We are headed for negative CPI prints soon...
It depends on whether investors in Europe think the ECB's efforts will create the inflation that the ECB claims it will. I don't know enough about the dynamics of the Euro or the mindset of European investors to really have an opinion on that. Here in the US, the Fed was able to raise inflation expectations during the various iterations of QE, and so long-term rates rose. At a certain point, one would think investors would eventually catch on to the fact that it's a lot harder to create inflation than most people think.
You’ve been on this message board since mid-November complaining about low interest rates. All they’ve done since then is go lower. If you had just bought some TLT at that time, you’d be up 14% by now (not counting distributions).
How quickly investors forget. Long term rates dropped over 100 basis points at the end of both QE1 and QE2 (and rates actually rose during QE1, QE2 and QE3). I spent the fall of 2013 on this message board suggesting that rates would fall when QE3 ended too, but people just wanted to argue with me. Strange. All they had to do was look at a freaking chart of interest rates for the past 5 years...
CPI averaged 1.62% for 2014, and there's an excellent chance it will be unchanged for 2015. The latest Y/Y CPI print (December) was 0.76%, and will likely go negative within a couple of months. Long term rates will follow the CPI downward, so you'd better get used to it. Sometime this year we will likely see the 30Y yielding below 2%.
A 2.40% yield on 30Y treasuries, when the CPI increase for all of 2015 will be around 0%, is actually a decent value.