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  • #825,041
  • Aug 13, 2013 1:28pm Aug 13, 2013 1:28pm
Quoting CJayB
{quote} Wouldn't logic dictate that no taper = more money into treasuries = rising bond prices = lower yields? I don't see why yields would be rising if they opt not to taper. Someone correct me?

taper of QE (less buying) means treas's will fall and yields will rise.
  • #825,042
  • Aug 13, 2013 1:31pm Aug 13, 2013 1:31pm
Quoting 1candlepower
{quote} taper of QE (less buying) means treas's will fall and yields will rise.
Right but the news out today suggested that they are unsure if they will taper next month.

Unless the markets did the opposite and priced in an increased chance of tapering the yields should be falling at the moment.
  • #825,043
  • Aug 13, 2013 1:35pm Aug 13, 2013 1:35pm
Quoting JeremyWS
{quote} taper off, not to do with retail sales at all imo. Either way if we close under 2.71% Im buying some 10's
do I understand correctly, you're going to fight the rise in interest rates?
If so, could you explore a bit?
Don't be a hero. Don't have an ego. Always question yourself
  • #825,044
  • Aug 13, 2013 1:39pm Aug 13, 2013 1:39pm
Quoting CJayB
{quote} Right but the news out today suggested that they are unsure if they will taper next month. Unless the markets did the opposite and priced in an increased chance of tapering the yields should be falling at the moment.
there's usually more than one factor involved in movements of anything... that's why i asked if anyone's heard anything about the 10yr beyond the retail sls news. i wish there was more of that on these forums .
  • #825,045
  • Aug 13, 2013 1:44pm Aug 13, 2013 1:44pm
its time to go long, right? up to 1.3550 or so// (yeah i changed my mind lols)
  • #825,046
  • Aug 13, 2013 1:44pm Aug 13, 2013 1:44pm
I do not trade the bond market. why yield rises when the price of treasury falls? how yield is related to the price of treasury?
ignore wackos and psychos, including myself. But I can't add myself to iggy
  • #825,047
  • Aug 13, 2013 1:47pm Aug 13, 2013 1:47pm
Quoting ffleo
I do not trade the bond market. why yield rises when the price of treasury falls? how yield is related to the price of treasury?

The money coming out of treasuries flows into bonds which causes the yield to lower due to the increase in demand
Money never sleeps...
  • #825,048
  • Aug 13, 2013 1:47pm Aug 13, 2013 1:47pm
Quoting ffleo
I do not trade the bond market. why yield rises when the price of treasury falls? how yield is related to the price of treasury?
If there is a fixed coupon on a bond trdaing at par (100) then the yield will be the coupon. If the price rises and the coupon is fixed then as a percentage of the price you pay (say 110) the effective yield will be lower, It works better when you think of dividend yields on stocks then apply to bonds.
  • #825,049
  • Aug 13, 2013 1:48pm Aug 13, 2013 1:48pm
Quoting ffleo
I do not trade the bond market. why yield rises when the price of treasury falls? how yield is related to the price of treasury?
Treasuries pay a fixed coupon rate.

Buy a treasury at $1000 and it pays $10 = 1% yield

Buy a treasury at $100 and it pays $10 = 10% yield.

Get it?
  • #825,050
  • Aug 13, 2013 1:49pm Aug 13, 2013 1:49pm
Quoting ffleo
I do not trade the bond market. why yield rises when the price of treasury falls? how yield is related to the price of treasury?

that's very basic, let's say atm a 2,7% treasury bond quotes 100%
If rates rise to 3%, this treasury bond will decline so far that buying it gives it a yield 3% and vise versa.
Don't be a hero. Don't have an ego. Always question yourself
  • #825,051
  • Aug 13, 2013 1:49pm Aug 13, 2013 1:49pm
This might help.

Treasury yields are determined by supply and demand. Treasuries are initially sold at auction by the Treasury Department, which sets a fixed face value and interest rate. If there is a lot of demand, the Treasury bond will go to the highest bidder at a price above the face value. This lowers the yield, because the government will only pay back the face value plus the stated interest rate.
If, on the other hand, there is not a lot of demand, then the bidders will pay less than the face value, which will increase the yield. That is why yields always move in the opposite direction of Treasury bond prices.
Treasury yields change every day, because hardly anyone keeps them for the full term. Instead, they are resold on the open market. Therefore, if you hear that bond prices dropped, then you know there is not a lot of demand for Treasuries, and that yields must increase to compensate for lower demand.
Money never sleeps...
  • #825,052
  • Aug 13, 2013 1:50pm Aug 13, 2013 1:50pm
Quoting USD-Bear
{quote} do I understand correctly, you're going to fight the rise in interest rates? If so, could you explore a bit?
Here is why I may buy some UST's this evening
Attached Image (click to enlarge)
Click to Enlarge Name: USTs.png Size: 83 KB
  • #825,053
  • Aug 13, 2013 1:51pm Aug 13, 2013 1:51pm
Quoting JeremyWS
{quote} If there is a fixed coupon on a bond trdaing at par (100) then the yield will be the coupon. If the price rises and the coupon is fixed then as a percentage of the price you pay (say 110) the effective yield will be lower, It works better when you think of dividend yields on stocks then apply to bonds.
ok i see. good answer.
ignore wackos and psychos, including myself. But I can't add myself to iggy
  • #825,054
  • Aug 13, 2013 1:52pm Aug 13, 2013 1:52pm
Quoting USD-Bear
{quote} that's very basic, let's say atm a 2,7% treasury bond quotes 100% If rates rise to 3%, this treasury bond will decline so far that buying it gives it a yield 3% and vise versa.
one has to consider duration also, and not duration of the bond. The BPV01 of said bond
  • #825,055
  • Aug 13, 2013 1:54pm Aug 13, 2013 1:54pm
Quoting JeremyWS
{quote} Here is why I may buy some UST's this evening {image}
ah I see, you're buying the rate eg selling the bond, all clear, thanks
Don't be a hero. Don't have an ego. Always question yourself
  • #825,056
  • Aug 13, 2013 1:55pm Aug 13, 2013 1:55pm
Dow and USD chart disagrees with a lot of things said. no bias in the chart.
Attached Image (click to enlarge)
Click to Enlarge Name: gwb.PNG Size: 46 KB
those who can, do. those who cant, talk about those who can
  • #825,057
  • Aug 13, 2013 1:57pm Aug 13, 2013 1:57pm
Quoting JeremyWS
{quote} one has to consider duration also, and not duration of the bond. The BPV01 of said bond
what's BPV01?
effective interest rate (coupon +/- redemption) of all T-bonds with same duration would react as I explained in my example imo
Don't be a hero. Don't have an ego. Always question yourself
  • #825,058
  • Aug 13, 2013 1:58pm Aug 13, 2013 1:58pm
Quoting ffleo
I do not trade the bond market. why yield rises when the price of treasury falls? how yield is related to the price of treasury?
surprised you ask...you seem pretty knowledgeable. anyway, simplest case is treasury bills: you buy them at a discount to face (or par) value, and at maturity (say 3 months), you get back the face value. the difference between your purchase price and what you get back is the "interest" on the money for the initial purchase. the purchase price here is what you pay when you buy them or get on the open market when you sell them if you're a bond trader.

that purchase price is what you see on charts. when the price falls, the money you get back at maturity increases and represents and effective increase in "interest". when prices go up, you get less at maturity and "interest" falls.

so, that is why prices run opposite to interest rates or "yield"

i am NO bond trader... as may be obvious to some. but the idea of the inverse relationship is very simple.
  • #825,059
  • Aug 13, 2013 1:58pm Aug 13, 2013 1:58pm
hell who needs trader confirmation im long now all the way up to 1.3550 .....
  • #825,060
  • Aug 13, 2013 1:59pm Aug 13, 2013 1:59pm
Quoting inpatient
This might help. Treasury yields are determined by supply and demand. Treasuries are initially sold at auction by the Treasury Department, which sets a fixed face value and interest rate. If there is a lot of demand, the Treasury bond will go to the highest bidder at a price above the face value. This lowers the yield, because the government will only pay back the face value plus the stated interest rate. If, on the other hand, there is not a lot of demand,...
explained equally well.
ignore wackos and psychos, including myself. But I can't add myself to iggy
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