Comments on: When bloggers examine the Treasury market http://blogs.reuters.com/felix-salmon/2010/03/29/when-bloggers-examine-the-treasury-market/ A slice of lime in the soda Sat, 18 May 2013 23:43:55 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: Ghandiolfini http://blogs.reuters.com/felix-salmon/2010/03/29/when-bloggers-examine-the-treasury-market/comment-page-1/#comment-13003 Ghandiolfini Tue, 30 Mar 2010 16:08:50 +0000 http://blogs.reuters.com/felix-salmon/?p=3116#comment-13003 The Fisher Effect eats up nominal returns, that is why interest related instruments is not worth writing about. On the other side of the fence, when APR's become EAR's, it is a fishy story altogether. The Fisher Effect eats up nominal returns, that is why interest related instruments is not worth writing about.

On the other side of the fence, when APR’s become EAR’s, it is a fishy story altogether.

]]> By: maynardGkeynes http://blogs.reuters.com/felix-salmon/2010/03/29/when-bloggers-examine-the-treasury-market/comment-page-1/#comment-12987 maynardGkeynes Mon, 29 Mar 2010 17:00:12 +0000 http://blogs.reuters.com/felix-salmon/?p=3116#comment-12987 Jim Rogers makes much the same point, that the real effect of the Feds ZIRP policy is to hide the the price signals that interest rates are supposed to provide. Given that interest rates are probably the single most important piece of information that financial markets provide, and an intentional policy to obscure them can not possibly be good for anyone. And really, even the TIPS "signals" are distorted, because with rates at zero, the 10 year TIPS really competes more with money market funds and other short term instruments than with the 10 year T-Bond. Jim Rogers makes much the same point, that the real effect of the Feds ZIRP policy is to hide the the price signals that interest rates are supposed to provide. Given that interest rates are probably the single most important piece of information that financial markets provide, and an intentional policy to obscure them can not possibly be good for anyone. And really, even the TIPS “signals” are distorted, because with rates at zero, the 10 year TIPS really competes more with money market funds and other short term instruments than with the 10 year T-Bond.

]]> By: WorldBeta http://blogs.reuters.com/felix-salmon/2010/03/29/when-bloggers-examine-the-treasury-market/comment-page-1/#comment-12986 WorldBeta Mon, 29 Mar 2010 16:54:06 +0000 http://blogs.reuters.com/felix-salmon/?p=3116#comment-12986 How the yield curve influences asset class returns: http://bit.ly/9nMESY How the yield curve influences asset class returns:

http://bit.ly/9nMESY

]]> By: wpw http://blogs.reuters.com/felix-salmon/2010/03/29/when-bloggers-examine-the-treasury-market/comment-page-1/#comment-12982 wpw Mon, 29 Mar 2010 15:33:43 +0000 http://blogs.reuters.com/felix-salmon/?p=3116#comment-12982 I follow various yield curves closely because it tells me something about what a lot of very smart investors are collectively thinking about the future. Yes it needs to be verified by various other sources, but it can be a very good indicator of the future. Right now we appear to be at a turning point but nobody is quite sure what it is we are turning to. Is the sell-off be driven by fears of debt? Or inflation? Or maybe the positive influence of growth? When this turn first started it looked fairly positive to me with the short-end rising and the curve flattening a bit, indicating rates could rise a bit and not choke off growth (which is what Krugman would have us believe). But then it turned into a broader sell-off which did not look so positive. Who knows! In a couple of years I will be able to look back at this and know what was going on, but for now it is still playing out. And you are right Felix, it may be so distorted by low rates that it does not mean what it used to mean. I follow various yield curves closely because it tells me something about what a lot of very smart investors are collectively thinking about the future. Yes it needs to be verified by various other sources, but it can be a very good indicator of the future.

Right now we appear to be at a turning point but nobody is quite sure what it is we are turning to. Is the sell-off be driven by fears of debt? Or inflation? Or maybe the positive influence of growth?

When this turn first started it looked fairly positive to me with the short-end rising and the curve flattening a bit, indicating rates could rise a bit and not choke off growth (which is what Krugman would have us believe). But then it turned into a broader sell-off which did not look so positive.

Who knows! In a couple of years I will be able to look back at this and know what was going on, but for now it is still playing out. And you are right Felix, it may be so distorted by low rates that it does not mean what it used to mean.

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