Investment BS Thread - Stocks/Futures/Mutual Funds/Bonds/Commodities/Options/ETFs/401ks/Etc

The drop in 10 yr is caused by the buying up of bonds today. This drop in the 10 yr, pushing it back below 3%, is actually making the yield curve (between 10 and 30 yr) less flat. This in turn is causing stocks to rise today.

 

Ahh ok, I though the flattening curve that concerns us in predicting a recession was between 1-year and 10-year bonds, not 10 and 30?

Edit: I was going by this theory:

 

yes in theory the similar correlation between 1 and 10 year, or 10 and 30 year, can be used to signal a recession.

 

Correct, the rates of the 10 year falling mean that it is converging on the 2 year rates. The 2 year rates would need to drop in line with the 10 year. Right now they are 50 basis points away (a half percent)

This is a two month view.

Keep in mind that treasury rates take a long time to catch up with the economy, including the stock market

 

Any idea what the difference is in a thriving economy, like say halfway between 2 recessions?

 

usually the rates are low and they are not close to each other. A flat yield curve just means "who the hell knows". When it's inverted (even a little), buckle the hell up.

 

Right now the yield curve looks fine.
Here's a quick chart I made of various snapshots throughout history.


https://www.treasury.gov/resource-c.../Pages/TextView.aspx?data=yieldYear&year=2018

Note the yellow line, low rates, big BP difference between short/long term bonds, bull market in the next year or so - 2016 was a generally good year for stocks. Same with 2017.. if you look at Jan 2016 rates, it was similar if not steeper than the yellow (2015) rates.

 

since the curve is much flatter than it was in 2015/2016, I would not be surprised if there is a lot more up/down movement. Meaning if you have a diversified mix, you won't see much change, but if you are dabbling in just a few, you're going to have to make sure you made the right call.

 

https://www.treasury.gov/resource-c.../Pages/TextView.aspx?data=yieldYear&year=2018

Curve has been getting flatter for 4 straight years. I looked at 2013/2012 and it was not as steep as 2014. I would say we peaked in 2014... been flattening ever since.

This is not an issue right now, but the problem is the government is trying to control inflation to cool down an overheating economy and they could very well trigger a recession if they get too "trigger happy" with rate increases.

Keep an eye on dollar strength relative to inflation and that will tell you what the government will try to do. If inflation is reduced, they may hold off. But if they are not patient, they might increase rates too quickly. This will cause a deflation recession eventually.

The good thing is there are many warning signs and once they all line up and you're able to start checking off boxes (dollar weakens, inflation/'overheating economy', increased interest rates, yield curve eventual flattening/inversion, deflation happens because gov was not smart, recession) then you will know ahead of time what you need to be doing

 

^ This last one makes a lot of sense in looking back at how the stock market behaved. Good stuff!

 

Dammit. I should have bought Netflix yesterday morning at 294

 

I told you to buy square up 6% today

 

I fucked up all over the place yesterday apparently

 

buy on the bad days, respect the yield curve. Two rules. Lol

 

I kind of forgot to check back on it yesterday. I had to go in to the office for a 4 hour meeting and then just never looked again

 

I know the feeling lol

 

just found this... waaaay better than technician or yahoo finance (which has some sort of bug and makes a candlestick default to the open price, which looks ridiculous)
https://www.tradingview.com/chart/

 

GDP is slowing, what a surprise!

 

3M is at 194 almost time for me to buy.

 

happy friday! hope it wasn't a bad one. I need square's share price to go up another 4 bucks to break even lol.