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Post by mozart522 on Jul 13, 2022 20:13:25 GMT
Isn't it always backward looking? Haven't they indicated they will need at least 2 months coming down before they will even think about backing down to .25? 100bp is just a guess and what I hope they do. .75 is a given and high confidence that another .75 in Sept. Even if you/they believe it has peaked, 9+% will need to be brought down. Yes it is - always backwards looking. Whether it is recognized as such - not necessarily. I don't care what they indicate as they have shown they can change course. They have certainly indicated they aren't very good at analysis, interpretation and timing. The inflation that is in the system can't be changed. If we knew it is presently getting hotter, then a greater raise might be helpful to effect future effects. A bigger raise when inflation is already slowing down, not so much. In fact it could slow down the economy more than is needed without any benefit. OK, But if they aren't very good at analysis, interpretation and timing, then why would they not go with the figure that tells them inflation is increasing. What could they use between now and the end of the month to cause them to chnge course?
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Post by Deleted on Jul 13, 2022 20:23:32 GMT
Well, the economic calendar is a good place to look. PPI, auctions, manufacturing data, energy prices, housing stats, etc..all could effect decisions. Economic indicators. We will find out. I wouldn't buy bonds right now and I wouldn't tie up available cash at this point.
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Post by mozart522 on Jul 13, 2022 21:00:00 GMT
Well, the economic calendar is a good place to look. PPI, auctions, manufacturing data, energy prices, housing stats, etc..all could effect decisions. Economic indicators. We will find out. I wouldn't buy bonds right now and I wouldn't tie up available cash at this point. Ok but all that is also backward looking. Manufacturing data, for example comes out on the first business day of the month. I'm just saying that all data is stale when it comes out. Many of the indicators, like jobs fluctuate up and down. I just don't see how the FED can come off the actual inflation data to make their decision, particularly since they are being hammered for being too slow. If the indicators say inflation in moderating, then they will look at next month's inflation number to decide.
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Post by Deleted on Jul 13, 2022 21:38:25 GMT
Well, the economic calendar is a good place to look. PPI, auctions, manufacturing data, energy prices, housing stats, etc..all could effect decisions. Economic indicators. We will find out. I wouldn't buy bonds right now and I wouldn't tie up available cash at this point. Ok but all that is also backward looking. Manufacturing data, for example comes out on the first business day of the month. I'm just saying that all data is stale when it comes out. Many of the indicators, like jobs fluctuate up and down. I just don't see how the FED can come off the actual inflation data to make their decision, particularly since they are being hammered for being too slow. If the indicators say inflation in moderating, then they will look at next month's inflation number to decide. Mozart - the shelter data in CPI is really backward looking and has a very large effect. We all knew it was coming. Other economic measurements are less backward. Some are weekly. Weekly Economic Index. I don't know - not my area - but I have to believe that there are indicators of real economic activity that can be looked at. Yup - there is a lot of pressure on them. Hope they don't bow to it. I would wait to see before buying bonds or tying up cash. We know the Fed doesn't always choose what they should..
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Post by mozart522 on Jul 13, 2022 21:57:56 GMT
@slooow,
Agree. As I said earlier. I'm waiting until after the hike later this month and then will likely go for the 6 month T-bill. I'll only be tieing up what would normally be bond money anyway.
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Post by retiredat48 on Jul 13, 2022 23:18:32 GMT
Isn't it always backward looking? Haven't they indicated they will need at least 2 months coming down before they will even think about backing down to .25? 100bp is just a guess and what I hope they do. .75 is a given and high confidence that another .75 in Sept. Even if you/they believe it has peaked, 9+% will need to be brought down. ... If we knew it is presently getting hotter, then a greater raise might be helpful to effect future effects. A bigger raise when inflation is already slowing down, not so much. In fact it could slow down the economy more than is needed without any benefit. Yes Sara...I agree. Moz...two months of coming down?? Sure, quite easily, if we define down as lesser than 9%, which is quite likely in next two prints given the known price declines already for July. R48
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Post by retiredat48 on Jul 13, 2022 23:28:14 GMT
LOL Now the FED will likely raise 100bps in July and 75bps or more in September. Can't wait to see what the 6th month T-bill is in August. However, did you note that after the high inflation number announced, the 2 yr treasury went up in yield for about an hour, then traded downward in yield. And the ten year treasury, ditto, closing way below 3% yield. Will be fun to watch what happens after the next fed meeting, but I suspect the same...no pronounced upward movement in treasury rates. The market knows the economy is in decline. Inverted yield curves (like now) only last for short periods. So will we see the long maturity bonds go to 3.5-4% to flatten the curve, or will 2 year go down below 3%? The bond market is saying the latter. Another interesting yield point would be 4% yields. If the ten year gets to 4%, I see an avalanche of buyers, retirees with billions and billions, seeking to lock in 4% for their balanced portfolios. 4% does great for Safe Withdrawal Rate calculations!! I see buyers not letting it get to 4% easily...front-running the rising yield. Like, I have a brother just retiring whose portfolio satisfies his spending needs, with about a 3.3% yield. Gets tempting to just use Treasuries! At least a goodly tilt. R48
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Post by mozart522 on Jul 14, 2022 10:46:35 GMT
... If we knew it is presently getting hotter, then a greater raise might be helpful to effect future effects. A bigger raise when inflation is already slowing down, not so much. In fact it could slow down the economy more than is needed without any benefit. Yes Sara...I agree. Moz...two months of coming down?? Sure, quite easily, if we define down as lesser than 9%, which is quite likely in next two prints given the known price declines already for July. R48 That would give them a basis for lowering the AMOUNT of the hike after Sept. They still have to bring it down a lot, but maybe with 25bps at a time.
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Post by fishingrod on Jul 14, 2022 11:07:57 GMT
Yes Sara...I agree. Moz...two months of coming down?? Sure, quite easily, if we define down as lesser than 9%, which is quite likely in next two prints given the known price declines already for July. R48 That would give them a basis for lowering the AMOUNT of the hike after Sept. They still have to bring it down a lot, but maybe woth 25bps at a time. This is showing up in the target rate probabilities. July has gone up to 100 bps, Sept. has gone up to 75 bps, and Nov. has gone down to 25 bps from 50, and Dec. has stayed at 25 bps. The end result is by DEc. we should be at 375- 400 bps, only 25 bps more than projected on 6/24/2022
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Post by mozart522 on Jul 14, 2022 12:09:30 GMT
retiredat48, There are changes in yield associated with rate changes and changes in yield associated with flight to safety. An increase in inflation indicates increased rate hikes, which indicates increased equity losses, which causes increased treasury buying, with lowers the yield...SOME. The clear math of rate change X duration is relentless. The only issue is when does a FED rate hike = a yield hike in some term of a bond. We know it is fast in t-bills, and much slower as we go out the curve. And we know it may be much different for bond funds, which hold all kinds of durations even if they average some term. One day changes are meaningless.
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Post by mozart522 on Jul 14, 2022 16:41:28 GMT
On Monday I started this thread saying the 6 month t-bill was at about 2.5, and that it might go up to 2.8-3% after the next hike. Well today the auction opened with an indicative yield of 2.9 BEFORE the hike. I think I will buy some now and see what happens in late July.
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Post by retiredat48 on Jul 14, 2022 20:09:22 GMT
On Monday I started this thread saying the 6 month t-bill was at about 2.5, and that it might go up to 2.8-3% after the next hike. Well today the auction opened with an indicative yield of 2.9 BEFORE the hike. I think I will buy some now and see what happens in late July. You have my blessing!! R48
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Post by mozart522 on Jul 14, 2022 20:13:36 GMT
On Monday I started this thread saying the 6 month t-bill was at about 2.5, and that it might go up to 2.8-3% after the next hike. Well today the auction opened with an indicative yield of 2.9 BEFORE the hike. I think I will buy some now and see what happens in late July. You have my blessing!! R48 And you mine!!
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Post by FD1000 on Jul 21, 2022 20:20:04 GMT
I bought SHM instead of CD?treasuries a couple of weeks ago, and sold today. SHM chart was much smoother than VGSH and I generally, like Munis more than treasuries. I still don't trust the market and why I rather buy smoother uptrend funds and I don't want to wait to next week for the Fed rate increase. Attachments:
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