I don't need to be good at the game, only good enough to beat my opponent,
- #542
- Nov 10, 2019 9:51pm Nov 10, 2019 9:51pm
- Joined Dec 2008 | Status: Trader | 2,931 Posts
persistence and determination alone are omnipotent
- #543
- Nov 11, 2019 2:57am Nov 11, 2019 2:57am
- Joined Dec 2008 | Status: Trader | 2,931 Posts
persistence and determination alone are omnipotent
Sorry I've been quiet lately guys! Just brought my baby boy home from the hospital yesterday and probably won't be too active for the rest of the week. I'm pulling for you all in the markets though and look forward to participating here in earnest soon. 
I've been out of the loop lately, but higher bond yields could be due to a number of things...
1.) Market expects less accommodative monetary policy. The Fed controls the front end of the curve and the front end can drag down the long end. If the market thinks the Fed won't cut again then the spread should widen.
2.) Expansionary fiscal policy is expected. If more debt is being issued then yields go up simply due to supply and demand. More supply with unchanged demand will result in a higher yield. Interestingly, the expansionary fiscal policy doesn't have to be domestic to drive up domestic yields. For example, if Germany announces expansionary fiscal policy then bund yields will go up but yields across the world will go up with bunds. As far as I can tell this is mostly due to different sovereign bonds being competing assets with one another. If the 10y bund was trading at 1% and moves to 1.5% then the US 10y may go from 2% to 2.4% for example.
As a side note, higher yields also equal a higher currency. International investors will want to chase higher yields so they'll need more of the local currency to buy, hence a higher currency.
3.) Inflation is expected to rise. Bond pricing is based on expected real bond yields. If a bond yields 5% and the inflation rate is 2% then the real bond yield is 3%. If inflation is expected to go to 2.5% then the bond yield should rise to 5.5% to maintain that 3% real interest rate. It doesn't work perfectly in practice, but it's relatively close.
4.) Increased default risk. This isn't really a factor in countries like the US, UK, Japan, Germany, Switzerland etc etc. It's very important to other nations like Argentina, Russia, etc and to a lessor extent the PIIGS of Europe.
{quote} TC, again great contribution, this meaning greater government debt? seems this rabbit is keep popping up with markets making highs, it's beyond me as to how this can happen and the word "recession" still being used, apparently if they cut again it's a sign, according to pundits, have a good weekend, D
1.) Market expects less accommodative monetary policy. The Fed controls the front end of the curve and the front end can drag down the long end. If the market thinks the Fed won't cut again then the spread should widen.
2.) Expansionary fiscal policy is expected. If more debt is being issued then yields go up simply due to supply and demand. More supply with unchanged demand will result in a higher yield. Interestingly, the expansionary fiscal policy doesn't have to be domestic to drive up domestic yields. For example, if Germany announces expansionary fiscal policy then bund yields will go up but yields across the world will go up with bunds. As far as I can tell this is mostly due to different sovereign bonds being competing assets with one another. If the 10y bund was trading at 1% and moves to 1.5% then the US 10y may go from 2% to 2.4% for example.
As a side note, higher yields also equal a higher currency. International investors will want to chase higher yields so they'll need more of the local currency to buy, hence a higher currency.
3.) Inflation is expected to rise. Bond pricing is based on expected real bond yields. If a bond yields 5% and the inflation rate is 2% then the real bond yield is 3%. If inflation is expected to go to 2.5% then the bond yield should rise to 5.5% to maintain that 3% real interest rate. It doesn't work perfectly in practice, but it's relatively close.
4.) Increased default risk. This isn't really a factor in countries like the US, UK, Japan, Germany, Switzerland etc etc. It's very important to other nations like Argentina, Russia, etc and to a lessor extent the PIIGS of Europe.
Self-sufficiency is the greatest of all wealth. - Epicurus
- #547
- Nov 11, 2019 10:51pm Nov 11, 2019 10:51pm
- Joined Dec 2008 | Status: Trader | 2,931 Posts
Sorry I've been quiet lately guys! Just brought my baby boy home from the hospital yesterday and probably won't be too active for the rest of the week. I'm pulling for you all in the markets though and look forward to participating here in earnest soon.
persistence and determination alone are omnipotent
{quote} Hope he is back in good health take care ...
It doesn't seem like I've missed too much lately. There's been a lot of risk-on due in part to trade hopes, but it seems like that's about it. I'm not super comfortable with this because if it doesn't come through the whole investment paradigm would change. We're just one Trump tweet away from a 300pt S&P drop, gold at 1,600, and the 10y at 1.5%. I'm not calling for any of that to occur, but we're in an unusual investment landscape where it's possible and basically unpredictable.
Self-sufficiency is the greatest of all wealth. - Epicurus
- #549
- Nov 14, 2019 8:09am Nov 14, 2019 8:09am
- Joined Dec 2017 | Status: Trader | 3,743 Posts
Sorry I've been quiet lately guys! Just brought my baby boy home from the hospital yesterday and probably won't be too active for the rest of the week. I'm pulling for you all in the markets though and look forward to participating here in earnest soon.
D
I don't need to be good at the game, only good enough to beat my opponent,
- #550
- Nov 14, 2019 9:48am Nov 14, 2019 9:48am
- Joined Dec 2017 | Status: Trader | 3,743 Posts
I don't need to be good at the game, only good enough to beat my opponent,
- #551
- Nov 14, 2019 9:57am Nov 14, 2019 9:57am
- Joined Dec 2017 | Status: Trader | 3,743 Posts
Looking for 8215 to breach for a downward continuation, any thoughts, charts,D
EDIT
Concerned the volume/activity hasn't supported the short, will monitor.
DEDIT
Concerned the volume/activity hasn't supported the short, will monitor.
I don't need to be good at the game, only good enough to beat my opponent,
- #552
- Nov 14, 2019 9:59am Nov 14, 2019 9:59am
Hi, welcome back detector.
Guys! I took a scary trade today, I would like to know your view on this:
To see a full idea, please check the link:
https://www.tradingview.com/chart/GB...he-correction/
Guys! I took a scary trade today, I would like to know your view on this:
To see a full idea, please check the link:
https://www.tradingview.com/chart/GB...he-correction/
We can't control the sea, but we can learn how to surf the waves.
- #553
- Nov 14, 2019 10:22am Nov 14, 2019 10:22am
- Joined Dec 2017 | Status: Trader | 3,743 Posts
Hi, welcome back detector. Guys! I took a scary trade today, I would like to know your view on this: {image} To see a full idea, please check the link: https://www.tradingview.com/chart/GB...he-correction/
D
I don't need to be good at the game, only good enough to beat my opponent,
- #554
- Nov 14, 2019 12:03pm Nov 14, 2019 12:03pm
- Joined Dec 2017 | Status: Trader | 3,743 Posts
I don't need to be good at the game, only good enough to beat my opponent,
- #555
- Nov 15, 2019 2:28am Nov 15, 2019 2:28am
- Joined Dec 2017 | Status: Trader | 3,743 Posts
Hi, welcome back detector. Guys! I took a scary trade today, I would like to know your view on this: {image} To see a full idea, please check the link: https://www.tradingview.com/chart/GB...he-correction/
D
I don't need to be good at the game, only good enough to beat my opponent,
- #556
- Nov 15, 2019 3:51am Nov 15, 2019 3:51am
- Joined Dec 2017 | Status: Trader | 3,743 Posts
{quote} A, pulled up the chart, not sure if your still short, it looks like the daily could be headed for 1.7340 the indicators are at the top end of the scale which would make a case for the short, however this is similar to 190 bars back on the daily, all that said you have done very well on your own merit so do as you see fit, as always good trading
D
I don't need to be good at the game, only good enough to beat my opponent,
- #557
- Nov 15, 2019 4:08am Nov 15, 2019 4:08am
- Joined Dec 2017 | Status: Trader | 3,743 Posts
Looking for 8215 to breach for a downward continuation, any thoughts, charts,
I don't need to be good at the game, only good enough to beat my opponent,
- #559
- Nov 15, 2019 6:10am Nov 15, 2019 6:10am
- Joined Dec 2017 | Status: Trader | 3,743 Posts
{quote} A, pulled up the chart, not sure if your still short, it looks like the daily could be headed for 1.7340 the indicators are at the top end of the scale which would make a case for the short, however this is similar to 190 bars back on the daily, all that said you have done very well on your own merit so do as you see fit, as always good trading
I don't need to be good at the game, only good enough to beat my opponent,
- #560
- Nov 15, 2019 6:13am Nov 15, 2019 6:13am
- Joined Dec 2017 | Status: Trader | 3,743 Posts
Equities remain in a strong up trend. NQ is in overbought territory, but not showing signs of reversal. {image}
, learnt my lesson here, closed the short, your right, not expecting anything soon, getting hammerd of late, opened short of WTI and missed an opportunity, back in again, 56.92 on the recent rise, if this goes bad will have to step out and regroup, thanks for taking the time, D
I don't need to be good at the game, only good enough to beat my opponent,