Why do people complain about today's rates being "high"? Where were you when mortgage interest rate was at 22%?
Population grows and a good paying job is harder to get. Anyway; you need some of college now day to get a decent paying job. Resource is becoming scarce; and more competition in workforce.
After 20 years of streaky trading I'm still living off of Treasury bond purchases from 1984....... It was free money.
Nice move. Lets say hypothetically you felt the R word was around the corner with a possible play into the D word. How would you position yourself for a long term treasury trade?
Pabst, how much could you have sold those for on the secondary market in 2002, when interest rates tested the 1-1.5% area?
Hypothetically I feel the same way. Here's the rub though. What if it's late 70's-early 80's type R with more than a hint of I thrown in. R+I=S, which in my view is unhealthy for Treasury's. The market though has had I on "ignore" for some time now. I bet lots of quants have seen their interest rate models hiccup with inputs of $60 oil, $650 gold, $1.00 cattle and bonds under 5%! Can tax receipts handle an R trending into D? Will I be unleashed through the anticipated dollar devaluations from fighting an R turning into a D? How will a R/D effect China's purchases of Treasury's? I'm short bonds in my futures account primarily because a. it's working and b. I'm bullish on core materials/commodities in the PPI. I'm long bonds in my portfolio because I like constant yield from a quality instrument. Clearly I'm confused.
Ya know BLSH, a funny thing but they were worth more in 86 than in 02. A long bond is sort of like a call in so far that as you get closer to maturity the time premium on the coupon diminishes. Keep in mind the Treasury redeems at par value. I've spread these things and rolled them so many times that my 12%'s (I think at one time I had 200k in 14%'s as well) have been out of my portfollio since the late 90's. I'm always open to swapping yield for additional principle....