Eyewitnesses on the ground estimated about 1500 protesters showed up, but I think even that was generous. But, to be fair, who wants to go carry a sign around in the rain, haha
And we bounced off 2.25% earlier today - who could have seen that coming? Is 2.25% the new 2.50%?
There are literally tens of tens in Trafalgar Square right now, protesting Brexit. You can faintly hear their chants during the CNBC reports: "Best out of three! Best out of three!..."
Wow, you are quite the prolific poster of nonsense. TLT actually closed today at a slight discount to its NAV of $139.28 (per the iShares website). Hedge funds generally arbitrage away any significant discrepancies between the price of TLT and the value of its underlying holdings. I prefer to hold 30Y treasuries directly myself, as I can construct a portfolio of longer duration. I suspect you don’t even understand the concept of bond duration (TLT’s duration, by the way, is currently 17.93 years). Maybe you should start posting on the TBT board, and join all the other folks who have zero understanding of the bond market?
Yields from earlier today…
British 10Y gilts down 15 bps to 0.94%
German 10Y bunds down 6 bps to NEGATIVE 0.105%
French 10Y down 8 bps to 0.316%
Japanese 10Y down 2 bps to NEGATIVE 0.205%
Swiss 10Y down 5bps to NEGATIVE 0.54%
Lastly, US 10Y down 10 bps to 1.48%
This morning Goldman cut its year-end yield forecast for the 10Y, from 2.4% to 2.0%, lol
…Swegone, Oustria, Nexit, Fruckoff, Deutschit, Czechout, Oustria, Fin-ished...
All good for US Treasuries, lol
I prefer holding 30Y Treasuries directly over a bond fund like TLT, but I think your analysis is flawed. The duration of TLT is 17.82 years (according to the iShares site). What is the duration of the 30Y bond you're comparing it to? A 30Y zero coupon bond has a duration of 30 years, but coupon-paying bonds have different durations, depending on the amount of the coupon payment. One reason I like holding 30Y Treasuries directly is that I have control over the duration of my portfolio (among other reasons).
It seems like the punchline to all my jokes nowadays is: “…and so that’s what Goldman Sachs told their clients to do, haha” (Ba-dum-tshhh!)
But seriously, folks, late last year the Squid was forecasting four Fed rate hikes in 2016. Earlier this year, that number dropped to three, and then in May it fell to two. Fast-forward to now and they’re calling for a 40% chance of…wait for it…a single rate hike this year…in December! Maybe! But like I said in May, that’s still too optimistic, Squid! It’s time to start forecasting the first rate CUT, haha.
By the way, in a follow up note Goldman also cut its US growth forecast for the second half of the year, but then, you already knew that. Thank you, Goldman Sachs, for all the memories and the laughs…
I used to read Murray Rothbard in college, so I'm sympathetic what you're saying. But we're stuck in the reality we've been given, so I invest accordingly. My fundamental thesis is that we're burdened by a severely over-indebted economy, and everything the Fed does (or will do) is counter--productive and will only make things worse...so we're doomed to slow growth, low interest rates, and extreme susceptibility to every little crisis that happens to pass our way.
Real wealth is created through hard work, innovation, increased productivity and real wage growth. The illusionary wealth I referred to in the other thread is the kind created from financial engineering (debt-funded stock buybacks, for example) and Fed-inspired asset inflation (fueled by artificially low borrowing costs). This kind of wealth can evaporate quickly, just as we saw today. You can’t solve a debt problem with more debt, but our clueless Fed just doesn’t get it.
Wow, if the Brexit vote continues as we're seeing here at midnight, we could easily see a 5% pop in TLT tomorrow...
The Brexit vote so far has been far closer than most expected. Maybe somebody already knew something before our close?
The latest academic research on the subject indicates that the “wealth effect”, if it even really exists, amounts to less than one cent of increased personal consumption per $1.00 increase in wealth. Lacy Hunt has pointed out the inherent logical flaw: If a person wishes to increase spending based on an appreciated asset, he has two options: 1) sell the asset, capture the gain and buy something else; or 2) borrow against the asset. In the first instance, money balances increase for the seller, but fall for the buyer. In the second instance, the accumulation of debt simply accelerates future consumption, so there is no net gain. It’s all an illusion!
Depends on your time horizon. If the “Brexit” doesn’t happen, I could see a relief rally in stocks and a sell-off in bonds, so it tactically might make sense to sell around the time of the vote. Contrary to what some have said here, hedge funds are still massively short 10Y+ Treasuries, so there’s likely a short squeeze happening at the moment.
I’m not a trader, though, and will likely stick it out due to my longer term thesis, which is that the global economy will continue to weaken and rates will continue to fall. I was re-reading Lacy Hunt’s 2Q 2014 quarterly report the other day, in which he casually mentions at the end that the yield on the 30Y could drop to the range of 1.7% to 2.3% “over the next several years”. Nothing goes in a straight line, but Lacy is looking more and more prescient by the day.
It’s no longer just a sovereign debt story. Per Tradeweb, about 16% of European investment grade corporate debt is now yielding below zero. The total, about $3.1 trillion notional, is triple the amount at the beginning of May. And as a reminder, close to $11 trillion of government debt (Euro-zone and Japan) now has a negative yield. In the land of the blind, the one-eyed man (the US Treasury market) is king.
Are you talking about Bill Gross, the guy who called the end of the bull market in bonds back in 2011? And then again in 2013? That guy? I keep trying to tell you he posts over at the TBT board now. You should join him.
I can’t tell if you don’t bother to read the articles you cite, or if you just don’t understand them. Commerzbank said it was considering storing cash in vaults rather than depositing it with the ECB and getting a negative return on its cash. I suspect CBK is still loaded up with Euro sovereigns and corporates (and probably USTs), as they’ve been issuing bullish notes on bonds for months. Even with a negative yield, there’s at least the potential for a positive return if the value of the bond keeps going up. A negative yield on a deposit, though, is just that, a guaranteed negative return.