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Started By
Message
re: Dow Futures down 485. JPM & MS both miss on earnings.
Posted on 7/14/22 at 10:31 am to go ta hell ole miss
Posted on 7/14/22 at 10:31 am to go ta hell ole miss
quote:
he 2 and 10 inversion is a bigger issue for most. That is classic recession indicator,
LINK
quote:
U.S. Treasury yields moved higher on Thursday as major bank earnings commenced and traders continued to digest the higher-than-expected 9.1% inflation print for June.
The 2-year Treasury yield, which is more sensitive to monetary policy changes than its longer-term counterparts, rose about 9 basis points to 3.232%.
That’s created a wide gap, or inversion, between the 2-year and 10-year notes, which on Thursday notched another record dating back to 2000. Yield-curve inversions, or when shorter-term government bonds have higher yields than longer-term ones, are generally viewed by markets as harbingers of recession.
The yield on the benchmark 10-year Treasury note rose 9 basis points to 2.995%, while the yield on the 30-year Treasury bond traded 5 basis points higher to 3.118%. Yields move inversely to prices, and a basis point is equal to 0.01%.
Can someone flesh this out for me? I understand that the inversion is a recession indicator, but it doesn't explain why.
2
Posted on 7/14/22 at 1:36 pm to bod312
quote:
I must have struck a nerve with you in our other thread from a few weeks ago
No nerve struck. You were incapable of seeing we were in a bear market in May and are now incapable of seeing we are in a recession. Your pie in the sky everything is wonderful, everything is okay or everything is not bad is comical.
quote:
I do feel you will be salty if it doesn't get labeled a recession.
I could not possibly care less if anyone labels anything whatever they choose to. I am continuing to buy in this market. The things I am buying are drastically different than the things you are buying since you think no recession until late 2023 or 2024.
Your condescending response with no substance is precisely why I did not want to even type the word recession with you in the same thread, though.
This post was edited on 7/14/22 at 1:37 pm
Posted on 7/14/22 at 2:03 pm to Aubie Spr96
I'm no bond expert but below is my back of the envelope understanding on the yield curve. Someone correct me if wrong. I've really only started trying to learn treasuries and bonds in last year as it seems macro is driving things more than fundamentals last couple of years. I'm primarily a fundamental based stock investor.
It basically means investors see more risk in the short term than long term which is backwards from a normally functioning yield curve as there should be more risk of inflation or rising rates over a longer timeline. So thus, the rates rise in the short term to make it a more attractive buy in order to find buyers.
If you have a 100 dollar face value bond and it yields 4% or $4, and that person wants to sell it because it's no longer a good rate because inflation..... but there are no buyers so they have to cut the price to 90 to find a buyer. Well the bond still pays 4% of 100, so the new yield is 4.4%, (4/90) thus rising yield.
So when you are seeing the short term yield rising, it means people are dumping the bonds at lower than face value. Price and yield are a inverse relationship.
For example when the fed was buying every bond they could find, it drove up the price of bonds, thus lowering the yield which is what they wanted. That was yield suppression.
It basically means investors see more risk in the short term than long term which is backwards from a normally functioning yield curve as there should be more risk of inflation or rising rates over a longer timeline. So thus, the rates rise in the short term to make it a more attractive buy in order to find buyers.
If you have a 100 dollar face value bond and it yields 4% or $4, and that person wants to sell it because it's no longer a good rate because inflation..... but there are no buyers so they have to cut the price to 90 to find a buyer. Well the bond still pays 4% of 100, so the new yield is 4.4%, (4/90) thus rising yield.
So when you are seeing the short term yield rising, it means people are dumping the bonds at lower than face value. Price and yield are a inverse relationship.
For example when the fed was buying every bond they could find, it drove up the price of bonds, thus lowering the yield which is what they wanted. That was yield suppression.
This post was edited on 7/14/22 at 2:23 pm
Posted on 7/14/22 at 7:34 pm to Aubie Spr96
quote:
Can someone flesh this out for me? I understand that the inversion is a recession indicator, but it doesn't explain why.
Because people think rates will be lower in 1-2 years, which is why you’re being paid less to tie up money for 10 years than you are for 2 years. You would only do that if you felt growth and/or inflation would be substantially lower over the entirety of that 10 years than it will be in the next 1-2 years.
People think tying up money for 10-years at 3.2% is crazy when you can get 3.3% for 2ish years, but they fail to see that the bond market is clearly trying to tell you something. When you’re holding your dock 2 years from now and getting sub 2.5% renewal rates, that 10-ye rate will look a lot more enticing.
That’s how bonds work. They’re always trying to tell you something.
This post was edited on 7/14/22 at 7:35 pm
Posted on 7/14/22 at 7:53 pm to out of bubble gum
Slackster is very weird. Don't worry about him.
Posted on 7/15/22 at 12:02 am to LesMilesNoMoe
quote:
LesMilesNoMoe
Says the other alter.
Posted on 7/15/22 at 6:59 am to out of bubble gum
Smart money is accumulating in this range. Notice when futures are red (or gap down), the indexes rally intraday and have been ending close to high of the day.
The indexes have been flat the past few weeks and showing a bottoming process. There's more upside risk at this level than downside so it's better to be long here, imo. Tech/growth looking to outperform.
The indexes have been flat the past few weeks and showing a bottoming process. There's more upside risk at this level than downside so it's better to be long here, imo. Tech/growth looking to outperform.
This post was edited on 7/15/22 at 7:01 am
Posted on 7/15/22 at 7:50 am to JimMorrison
Where's the alter to post a thread when the indexes rally? Looking mighty green today. I guess there are only doom and gloom alters
This post was edited on 7/15/22 at 7:51 am
Posted on 7/15/22 at 9:22 am to JimMorrison
Yeah bruh keep putting money into stocks lol there are less fortunate people out there who need your money for crab legs and midnight basketball
Dollar cost averaging? They should call it what it really is: reparations
Dollar cost averaging? They should call it what it really is: reparations
Posted on 7/15/22 at 9:26 am to out of bubble gum
Rule #3. Don't argue your point. Take it like a man.
Posted on 7/15/22 at 9:44 am to JimMorrison
quote:
Where's the alter to post a thread when the indexes rally? Looking mighty green today. I guess there are only doom and gloom alters
Seems to be the case for a few on here. They only show up to spread their Doom and Gloom on Red days. See HUSSSS and Bard
This post was edited on 7/15/22 at 10:20 am
Posted on 7/15/22 at 10:15 am to el Gaucho
quote:
Yeah bruh keep putting money into stocks lol there are less fortunate people out there who need your money for crab legs and midnight basketball
Dollar cost averaging? They should call it what it really is: reparations
Lol we're all ending up in the fema camp regardless. Let me lose my money on stocks!
Posted on 7/15/22 at 10:19 am to JimMorrison
quote:
Lol we're all ending up in the fema camp regardless.
Posted on 7/15/22 at 10:24 am to JimMorrison
quote:
Smart money is accumulating in this range. Notice when futures are red (or gap down), the indexes rally intraday and have been ending close to high of the day.
I agree
The markets have been very good about rebounding intraday which shows me some signs of bottoming.
Not saying things take off like a rocket from here but I feel better about downside risks at these levels than I did a few weeks ago.
Posted on 7/15/22 at 11:06 am to JimMorrison
If you live in Louisiana you’re already in the fema camp
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