Inflation Duration

[FireFoley]

So Crete, you are actually making money on the prices of your T-Bills, LOL. Yield lower price higher. But to answer your question, there really is not an answer other than markets are markets, and they are forward looking. the Fed has raised the overnight rate to 3% now, so all those durations you asked about are all still higher so they sniffed out rate hikes months ago so they did not really need to move. Perhaps a reason might be is they do not see the FED actually getting to 4,5%? Or another reason might be like us, many people have been buying the short end of the curve. I have seen no less than 10 "pros" on the blower this week salivating at buying 3 month-2 year treasuries just to hide for a while so it could be demand.

So yesterday at the close I mentioned that the 2 year ran in the aftermoon yet the 10 year and 30 year yields were LOWER on the day. But today the long end is on fire and much more than the short end. What does that say? I find that curious as when asked about balance sheet runoff at the presser, Grand Master J said it is something they will look at in a few months. So what he is saying IMO is, we are not selling anything, we are just going to let our holdings mature an not reinvest and just return the cash to the Treasury. so that means, to me, that they will not sell any MBS for fear of disrupting the long end anymore than it is going up now?

 

[Concrete Helmet]

So Crete, you are actually making money on the prices of your T-Bills, LOL. Yield lower price higher. But to answer your question, there really is not an answer other than markets are markets, and they are forward looking. the Fed has raised the overnight rate to 3% now, so all those durations you asked about are all still higher so they sniffed out rate hikes months ago so they did not really need to move. Perhaps a reason might be is they do not see the FED actually getting to 4,5%? Or another reason might be like us, many people have been buying the short end of the curve. I have seen no less than 10 "pros" on the blower this week salivating at buying 3 month-2 year treasuries just to hide for a while so it could be demand.

So in a nutshell heavy buying on the short term means the auctions were busy and pushed the yield down? Dow is under 30K this morning signaling more flight to safety. I'm seeing "brokered CD's " at around 4.25 for 12-18 months whatever those are. I hate to lock up any of this cash longer than 6 months which is my furthest maturity on the Tbills but if those rates keep trickling up it would start to become attractive enough. I see that they are callable....you know anything about them? Not sure what "brokered CD means?

 

[FireFoley]

not sure what a brokered CD is. I don;t trust any of these retail places offering these this things and I am with you, I want my money as liquid as possible. I just saw that the 5 YR. gilt (Britain) is up almost 50 basis points this AM. Never seen that. Former Fed prez Fisher has said 2 days in a row that strong dollar is helping to keep rates down (relative) with lots of foreign buyers. This is why I keep cash on hand and knew shytty fiscal policy due to the Kung Flu, followed by bad monetary policy on top of just plain stupid American people would come home to roost eventually. I am too simple of a thinker to get to extravagant, but finally being able to get 5 and 6 percent in fixed income with little to no risk for an old man like me is very attractive. Add that to stocks I have on my list at certain prices and I finally get a chance to play.

The one thing I have to keep reminding myself of is that no one under the age of 50 has ever seen a rising rate environment so many money managers or "pros" have never really had any period of time where fixed income was competition for them throwing darts at a board and buying whatever stock it landed on. Don;t know about you but I am happier getting 5% risk free and having zero headache than buying saying MSFT at 250 and waiting for it to get to 265. I know it will but the roller coaster does not excite me. That time will come again it is just not now. Just be there to pick up what others choose to toss out.

BTW how is biz? 30yr Conv. Mtge. getting into the high 6's?

 

[FireFoley]

As a follow up, we have already had a 12 + basis point reversal in the treasury market in an hour. 10's were above 3.80 now below 3.70. Not sure how it will shake out but at some point we all know the FED will blink. There is just so much working against them not just domestically, but worldwide. You have people calling Britain an emerging market and the dollar is on a rocket ship. soon it might be worthwhile to dig up the shoe boxes of cash buried in your backyards and go on a spree, whether it be buying assets or traveling the world?

 

[Concrete Helmet]

BTW how is biz? 30yr Conv. Mtge. getting into the high 6's?

Busy but not nearly as profitable since most HELOC's(under 100k) don't require title insurance. Purchases have slowed but not died off all together.
Good thing the divorces are kicking in with the economy going to sh!t.....nothing better than deciding you can't live with your spouse and having to double the rate of your mortgage which you just refied at a record low 12 months ago and give them half the remaining equity just to get rid of him or her....

 

[FireFoley]

Busy but not nearly as profitable since most HELOC's(under 100k) don't require title insurance. Purchases have slowed but not died off all together.
Good thing the divorces are kicking in with the economy going to sh!t.....nothing better than deciding you can't live with your spouse and having to double the rate of your mortgage which you just refied at a record low 12 months ago and give them half the remaining equity just to get rid of him or her....

 

[FireFoley]

Inflation increased 0.4% in September, more than expected despite rate hikes

The consumer price index was expected to increase 0.3% in September, according to Dow Jones estimates.

www.cnbc.com

 

[Bernardo de la Paz]

 

[GatorCatsi]

 

[Concrete Helmet]

Not to worry I'm sure Buttplug is on top of this.....

 

[GatorCatsi]

Not to worry I'm sure Buttplug is on top of this.....

 

[Concrete Helmet]

I would laugh but the reality is were screwed.....

 

[Bernardo de la Paz]

Wasn't sure exactly which thread to put this, but it's an interesting article on the new ways the Fed has found to use its printer during the current banking crisis.

Fed’s Balance Sheet Plunges by $230 Billion in 6 Weeks, Biggest such Plunge in 14 Years

Massive gyrations on the balance sheet after FDIC’s take-down of First Republic, sale of its assets to JP Morgan, and FDIC’s loan to JPM.

wolfstreet.com

 

[GatorCatsi]

Good lord, those labor market numbers.

 

[abefroman]

Take your bets. Be weary of adjusted government labor math

 

[Bernardo de la Paz]

https://www.cnn.com/2023/07/10/economy/florida-inflation-hotspot-regional/index.html

With the media gushing over the alphabet people fleeing the state you'd think the population is declining.