Bond yields are so low!

Discussion in 'Economics' started by The Kin2, Jan 17, 2008.

  1. LoL @ 2 year yielding 2.4%

    T-bill @ 2.9%

    Why foreigners buy our bonds is beyond me. Even fake inflation is at 4% along with dollar depreciation. I guess the day they stop is when rates will skyrocket. Maybe.
  2. There buying because its what keeps this system going. Keeps us employed and them employed
  3. they use to get a return when they bought our bonds. Now they lose money. At some point they might as well give their goods and services away for free.
  4. Recession = price deflation, which means these returns in real terms are much higher. Corporations are cash rich (i'll leave out the broke financials); a lot of that money comes from domestic sources ... We have the largest GDP in the world.
  5. Recession does not nessarly mean price deflation. We could very well have stagflation, which appears likely to be the case.
  6. Price appreciation. Yields go down and bond prices go up. It's very plausible that anybody buying bonds are counting on declining interest rates which will create capital gains opportunities on the prices.
  7. Yes. Then interest rates should be falling hard then. We're currently at 4.25% and with every cut bond yields SHOULD trade even lower.