which one leads?

Shagi · Feb 27, 2008

Quote from black diamond:

I'm not saying you are wrong but I don't understand how this can happen. The govt bond market is deep and hard to manipulate, not like an indidvidual stock. I am sure it takes billions of $ just to move the 10 yr rate by a basis point or two. How could long term rates be manipulated up without somebody agreeing to borrow billions of $ at higher than reasonable rates?

The unusually low long term rates we had for a while were a little easier to understand - asian central banks were looking for a safe place to invest lots of dollars we were sending them. You could call it currency manipulation or just them acting rationally, but either way there was a story. But I don't see a story that goes with the recent steepening other than market forces, inflation fears, and where we are in the fed cycle.

Do you have a theory of how this is happening or just a feeling the curve is too steep?
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I dont have any theory to back up my views but just looking at the rates not only is it steep but its even getting wider. See chart, the green is 30 year and the purple is 10 year.

Shagi · Feb 27, 2008

Thats a monthly chart from 1994

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which one leads?

Shagi

rates.png

Shagi