US Downgrade: How much will 20-30 yr be down? (or up)

Discussion in 'Financial Futures' started by scriabinop23, Aug 6, 2011.

Expected price movement on long bonds?

  1. -15% or more

    0 vote(s)
  2. -10%

    0 vote(s)
  3. -5%

    0 vote(s)
  4. -2.5%

    2 vote(s)
  5. Unchanged

    4 vote(s)
  6. +2.5%

    3 vote(s)
  7. +5% ore more

    7 vote(s)
  1. Just want to get consensus here.

    50bp on the 20 yr either way calculates to about 6% at these leaves.
  2. Bond traders won't know what to do except to buy more bonds. This is a real paradigm shift. Uncle Ben will not allow yields to rise because that would stymie a economic recovery that was already on life support.

    I think bonds close up.
  3. Maybe so, but long term, bond traders need money to buy more bonds. Where will it come from?

    Low rates were not a concern when there was no downside risk. But now it's even lower rates with some down side risk.

    If I'm getting 2.5% I want virtually no risk.

    The funny thing is, maybe instead of buying bonds I will just open a restaurant or buy an apartment building. If nothing is without risk anymore, at least I have a chance.

    And that's the kind of thinking that could turn things back around.

    In which case, bonds would go down.
  4. And when I say risk, I'm not talking credit risk. I mean the risk that nobody wants to buy my lousy low paying bonds for more than I paid for them.
  6. yeah, I'm confused. Did S&P downgrade our debt or our stock market?

    According to the girl on TV (who knows way more about make up and hairstyles than I ever will) the mkt went down because of the downgrade.

    So how come if I'm short bonds and long stocks I'm still losing money?

    If I sell bonds because they are downgraded, what am I gonna do with the money?

    I don't know, buy stocks?
  7. For USTs a downgrade is a meaningless sideshow. For risky assets, such as equities, the mkt perceives the downgrade to be a very meaningful piece of news (or just a final straw, as the case may be). So sell them stocks and buy them bonds.
  8. well Martin, you may be right, I just got tired of loaning the US Government my money since I wasn't getting much for it in return.

    I'll loan them money if you promise to pay me more than I paid for my bonds.

    If you want to buy anymore let me know, I want to sell and do something else with my money. Just what I haven't decided yet.
  9. i am long TBT. hurting