T bills near 1%

[Tulpen]

Holy bananas!

[Mega]

Re: T bills near 1%

Never understood T bills or other bonds, the more they are bought the more the rate falls?
Mike

[FRED]

Re: T bills near 1%

Never understood T bills or other bonds, the more they are bought the more the rate falls?
Mike

Bond prices move opposite rates and yields.

Demand rises, price rises, rate falls.

Demand falls, price falls, rate rise.

Demand for a bond is a function of relative return on risk among other fixed income instruments and non-fixed income instruments.

Rising short treasury prices reflect market's perception of higher default risk on lower quality bonds (e.g., corporate bonds).

Rising short treasury prices versus long term treasury prices reflect market's perception of rising long term inflation risk.

Medium term forecast: interest rates fall to near zero at the low end of the curve and rise at the long end.

[jk]

Re: T bills near 1%

Medium term forecast: interest rates fall to near zero at the low end of the curve and rise at the long end.

the rise at the long end has to happen, but when? i bought some puts on tlt this morning.

[Mega]

Re: T bills near 1%

Is there an INFO page somewhere that i could read up on this subject?

Can't understand it at all!
Mike

[rachits]

Re: T bills near 1%

from wikipedia:

Treasury securities are government bonds issued by the United States Department of the Treasury through the Bureau of the Public Debt. They are the debt financing instruments of the U.S. Federal government, and they are often referred to simply as Treasuries or Treasurys. There are four types of marketable treasury securities: Treasury bills, Treasury notes, Treasury bonds, and Treasury Inflation Protected Securities (TIPS) There are several types of non-marketable treasury securities including State and Local Government Series (SLGS), Government Account Series debt issued to government-managed trust funds, and Savings bonds. All of the marketable Treasury securities are very liquid and are heavily traded on the secondary market. The non-marketable securities (such as savings bonds) are issued to subscribers and cannot be transferred through market sales.

However, this doesn't tell the really underlying story about why they are important. Most info sites go into great detail on all the different treasury securities are out there, and all that detail is quite irrelevant except for the term of the bond.

First (and simplest) thing to get into your head is that treasuries are bonds that have 0 default risk. They pay some amount of interest, always less than any other dollar denominated bond of the same term (lets ignore tax implications for now). The only risk in holding them is inflation risk, in that the dollars you eventually get paid are worth less than before. Not all treasuries are the same. Some are longer term and some are shorter term (all the way down to 4 weeks). The longer term ones contain more inflation risk, and the shorter term ones contain very little risk.

When people get scared of all other investment vehicles, they usually pour their money into treasuries. When this happens, the yield on them drops (demand / supply). This is whats happening right now (pretty much continuously since August).

However, what also affects the yield is the fear of future inflation, and that drives yields up, especially on the longer term bonds. This hasn't happened too much yet.

Hope this clears things up.

[FRED]

Re: T bills near 1%

the rise at the long end has to happen, but when? i bought some puts on tlt this morning.

April 1, 2009.

Just kidding. I have no idea.

[friendly_jacek]

Re: T bills near 1%

the rise at the long end has to happen, but when? i bought some puts on tlt this morning.

Are you still holding on to the puts?
It feels like we reached a tipping point today when $IRX went down to 0.2%. http://finance.yahoo.com/q?s=%5EIRX
I'm too retarded to learn puts, I shorted TLT instead.

[Jim Nickerson]

Re: T bills near 1%

Are you still holding on to the puts?
It feals like we reached a tipping point today when $IRX went down to 0.2%. http://finance.yahoo.com/q?s=%5EIRX
I'm too retarded to learn puts, I shorted TLT instead.

The RSI and MACD on $TYX are set up in positive divergences if the yield turns higher here very soon, but that has to happen I believe or the setup will fail if yield falls much (how much I don't know).

http://stockcharts.com/h-sc/ui?s=$TY...195&a=80280227

[jk]

Re: T bills near 1%

Are you still holding on to the puts?
It feels like we reached a tipping point today when $IRX went down to 0.2%. http://finance.yahoo.com/q?s=%5EIRX
I'm too retarded to learn puts, I shorted TLT instead.

yes, i'm still holding. they're leaps, due to expire in jan '09, so i have some time.

[GRG55]

Re: T bills near 1%

Holy bananas!

Now what was that somebody was saying about the safety of short term T-Bills...

Treasuries Fall as Stocks, Mortgage Purchase Ease Haven Appeal

By Sandra Hernandez
March 24 (Bloomberg) -- Treasuries fell as stocks rallied and Federal Home Loan Banks were freed to increase their purchase of mortgage-backed bonds, diminishing the appeal of government debt...

...Rates on three-month Treasury bills rose 50 basis points to 1.07 percent, the biggest increase since Aug. 21. They touched 0.387 percent last week, the lowest since at least 1954...
http://www.bloomberg.com/apps/news?p...d=aTXiQtUNVf_c

[FRED]

Re: T bills near 1%

Now what was that somebody was saying about the safety of short term T-Bills...

Treasuries Fall as Stocks, Mortgage Purchase Ease Haven Appeal

By Sandra Hernandez
March 24 (Bloomberg) -- Treasuries fell as stocks rallied and Federal Home Loan Banks were freed to increase their purchase of mortgage-backed bonds, diminishing the appeal of government debt...

...Rates on three-month Treasury bills rose 50 basis points to 1.07 percent, the biggest increase since Aug. 21. They touched 0.387 percent last week, the lowest since at least 1954...
http://www.bloomberg.com/apps/news?p...d=aTXiQtUNVf_c

The volatility is stunning.