U.S. 10 Rate climbs to 2.52%

[gavinfielder]

Interest rates did drop prior to QE2 and 3. I supplied a graph showing it. The US labor market is not perfect, but its better than last year. And next year it is expected to be better than this year. Do you disagree with that statement?

There's a lot of rhetoric to that effect. I imagine the Obama administration is doing everything it can to make people think that.

Living in Sacramento, where the homeless are still begging on every other corner, nobody I know can find jobs, and anyone who has a modicum of resources and any sense are heading north--being told the economy is improving is nothing but bitter irony.

 

[JP Hochbaum]

Umm.. better check the US budget. Interest payments are part of the mandatory budget. As Bond issuance is part of the Department of Treasury. :2razz:

And the government just prints away deficits and uses bonds as a debt instrument for it. You do realize the US budget pays American people right? LOL

 

[Kushinator]

SO essentially the federal reserve will receive a higher yield for all those bond purchases, as will any US citizen who has them. More money = good news!

No, their return is locked in. Essentially, the "market value" of their bond portfolio is declining. More to do with perceived U.S. growth and Fed taper talk (which induces futures speculation) than anything else.

 

[JP Hochbaum]

No, their return is locked in. Essentially, the "market value" of their bond portfolio is declining. More to do with perceived U.S. growth and Fed taper talk (which induces futures speculation) than anything else.

Yes it is locked in, but new bond purchases have a higher yield.

 

[cpwill]

Now, lets look at Treasuries. The rates are incredibly low so why would they be so popular? Because there are people who have unconscionable amounts of money. We have billionaires all ove the place. They have to put their money somewhere other than under their mattress. So, despite the negligible return, they like Treasuries because you absolutely, positively will get your money back when you are entitled to it. The extent of US debt doesn't matter to the lender - the US will absolutely give you your dollars even if we at DP have to stay up all night printing them.

Sure, the USG wants to keep rates low because they owe so much that the cost of interest to them is a factor. But in terms of safety - nothing can be safer than the full faith and credit of the USA.

..... well, the credit ratings agencies, the bond market, and the credit default swap market.... beg to differ. Coke-a-Cola, for example, at one point I recall was safer than the 'full faith and credit of the USA'.

Rich people don't get or stay that way by being stupid. And parking your wealth in T-Bills right now and leaving it there is stupid.

Remember, I only questioned the concept of "safety". I'm not arguing for more debt. Personally, I would be better off if rates were higher because I'm a retiree and 20 years ago, if you told somebody rates would drop below 1%, they would have thought you insane. So, I don't get the ROI I had hoped for but that's just me. I don't need treasuries, I just keep my money in the cat carrier.

well now I know what to rob. Third house on the right, yes?

U.S. Treasuries are absolutely considered a flight to safety - while there are "safer" things out there, there aren't any with the size of the US Treasury Bond Market. But sovereign debt as an asset class is in for a beating for the next few years.

 

[Kushinator]

Yes it is locked in, but new bond purchases have a higher yield.

The question is: does the future return in new bond purchases meet or exceed the change in the present value of the Fed's bond portfolio? The Fed is purchasing around $45 billion a month in U.S. Treasuries, while a great deal (more than 80%) goes to repurchase maturities.

 

[specklebang]

No one company can ever be viewed as equivalent to the "full faith and credit etc." Rich people aren't necessarily smarter than anybody else. More successful can come through many sources. Right place, right time, right friends, right inheritance and dumb luck are a big part of getting rich. And once you're rich, you have to put that money somewhere. Not everybody wants to reinvest their fortunes, many are content to manage them.

If you had a billion dollars (and were noot giving it away to your friends) where would you put it?

What do you know of that pays better than treasuries with equal safety?

Third house on the left if you're going South. Watch out for armed cats and homeowners!

..... well, the credit ratings agencies, the bond market, and the credit default swap market.... beg to differ. Coke-a-Cola, for example, at one point I recall was safer than the 'full faith and credit of the USA'.

Rich people don't get or stay that way by being stupid. And parking your wealth in T-Bills right now and leaving it there is stupid.



well now I know what to rob. Third house on the right, yes?

U.S. Treasuries are absolutely considered a flight to safety - while there are "safer" things out there, there aren't any with the size of the US Treasury Bond Market. But sovereign debt as an asset class is in for a beating for the next few years.

 

[DA60]

Like it says in my signature...own precious metals and agricultural commodities.

It may take 5-10 or even more years...but in my opinion, these will be booming when the true nature of this mess is finally apparent to all.

Of course, few of you will agree with me...this is just for 'I told you so' proof.


:wink:

 

[austrianecon]

And the government just prints away deficits and uses bonds as a debt instrument for it. You do realize the US budget pays American people right? LOL

There are TWO different budgets.. Mandatory which are Government debts that have to be paid then Discretionary. The Mandatory budget is what pays certain Americans, Foreigners, Mutual Funds, Hedge Funds and whoever else. China, Japan and a few others hold most of the US debt. So not many Americans get paid.

 

[cpwill]

No one company can ever be viewed as equivalent to the "full faith and credit etc." Rich people aren't necessarily smarter than anybody else. More successful can come through many sources. Right place, right time, right friends, right inheritance and dumb luck are a big part of getting rich. And once you're rich, you have to put that money somewhere. Not everybody wants to reinvest their fortunes, many are content to manage them.

A little over 80% of American millionaires are first generation wealthy - they didn't inherit a dime. Of the remaining 15-20%, most of them make their own wealth on top of having inherited some money. Most Americans who come to money have some luck - but they come to it through labor.

If you had a billion dollars (and were noot giving it away to your friends) where would you put it?

I would found a Non-Profit Private Militarized Company with the mission set of providing security to aid shipments in high-risk areas, anti-piracy, and counter-human-trafficking operations.

What do you know of that pays better than treasuries with equal safety?

I find the very question itself interesting - I don't really see how treasuries are all that "safe" - they are almost guaranteed at this point to decline in value. Interest rates are sure to climb, meaning that the value of the bond itself is sure to fall, and inflation itself is very likely to eat into, if not negate, if not overtake the "return" on current and recent Treasuries. How "safe" is your T-Bill giving 1.85% in a scenario where interest rates have risen to 5.5% and inflation is at 3.8%? It's about as safe as keeping your money in a bank now, but taking out a small portion of it every month and lighting it on fire.

Third house on the left if you're going South. Watch out for armed cats and homeowners!

Armed Cats!?! My only weakness.... how did you know, vile fiend?!? :shakes fist:

 

[specklebang]

No one company can ever be viewed as equivalent to the "full faith and credit etc." Rich people aren't necessarily smarter than anybody else. More successful can come through many sources. Right place, right time, right friends, right inheritance and dumb luck are a big part of getting rich. And once you're rich, you have to put that money somewhere. Not everybody wants to reinvest their fortunes, many are content to manage them.
A little over 80% of American millionaires are first generation wealthy - they didn't inherit a dime. Of the remaining 15-20%, most of them make their own wealth on top of having inherited some money. Most Americans who come to money have some luck - but they come to it through labor.
•••I did not say otherwise. I just said that rich people weren't necessarily smarter. That does not discredit their efforts. "The harder I work, the luckier I get".

If you had a billion dollars (and were noot giving it away to your friends) where would you put it?
I would found a Non-Profit Private Militarized Company with the mission set of providing security to aid shipments in high-risk areas, anti-piracy, and counter-human-trafficking operations.
•••Let me rephrase the question. Lets assume your circumstances are not conducive to starting a new enterprise with that money. You just need to park it. So, now you know what I'm asking, please answer.

What do you know of that pays better than treasuries with equal safety?
I find the very question itself interesting - I don't really see how treasuries are all that "safe" - they are almost guaranteed at this point to decline in value. Interest rates are sure to climb, meaning that the value of the bond itself is sure to fall, and inflation itself is very likely to eat into, if not negate, if not overtake the "return" on current and recent Treasuries. How "safe" is your T-Bill giving 1.85% in a scenario where interest rates have risen to 5.5% and inflation is at 3.8%? It's about as safe as keeping your money in a bank now, but taking out a small portion of it every month and lighting it on fire.
•••A bank can only insure $250K of your money. Lets just assume you don't want to open 4000 bank accounts. Its not like I'm making this up. Look at all the T-bills held by Arab Oil Sheiks. There's only one place youi can do this and it isn't a CD. China has hundreds of billions of dollars. Lets discuss the safest place to put this while its not needed.
Its not possible to buy T-Bills and not get your money back. As to what the purchasing power will be when and if you do is another topic altogether.

Third house on the left if you're going South. Watch out for armed cats and homeowners!
Armed Cats!?! My only weakness.... how did you know, vile fiend?!? :shakes fist:
I've issued them kevlar, replaced their claws with steel blades with an optional poison release. Unless you bring treats, you're as good as dead.

A little over 80% of American millionaires are first generation wealthy - they didn't inherit a dime. Of the remaining 15-20%, most of them make their own wealth on top of having inherited some money. Most Americans who come to money have some luck - but they come to it through labor.



I would found a Non-Profit Private Militarized Company with the mission set of providing security to aid shipments in high-risk areas, anti-piracy, and counter-human-trafficking operations.



I find the very question itself interesting - I don't really see how treasuries are all that "safe" - they are almost guaranteed at this point to decline in value. Interest rates are sure to climb, meaning that the value of the bond itself is sure to fall, and inflation itself is very likely to eat into, if not negate, if not overtake the "return" on current and recent Treasuries. How "safe" is your T-Bill giving 1.85% in a scenario where interest rates have risen to 5.5% and inflation is at 3.8%? It's about as safe as keeping your money in a bank now, but taking out a small portion of it every month and lighting it on fire.



Armed Cats!?! My only weakness.... how did you know, vile fiend?!? :shakes fist: