Front end trades are a bet on the calendar, not the economy
Short duration traded at 81.12, -0.01% on the session. The two-year is arithmetic on meeting dates, and it gets discussed as though it were a growth forecast.
Free 3 min read
SHYIEF
Stock
TLT
TLT
Delayed
Notes mentioning TLT
14The belly of the curve is where policy error shows up first
Intermediate duration traded at 89.54, +0.02% today. Five to ten years out is where the market prices the mistake rather than the intention.
Free 3 min read
IEFTLT
The long end is not pricing a recession, whatever the headlines say
Long duration traded at 82.19, -0.12% today. A steepening curve and a recession bid are not the same thing, and conflating them costs money.
Free 4 min read
TLTIEF
The dollar's floor is a policy choice, not a market one
The dollar proxy changed hands at 28.06 this morning, +0.11% on the session. The more useful question is who sets the floor, not where it sits.
Free 4 min read
UUPTLT
The dot plot is doing the tightening for them
A central bank that projects fewer cuts than the market expects can tighten conditions without moving rates at all.
Free 2 min read
Supply fears are already in the long end
Heavy government issuance is the reason given for high long yields. By now the market has priced a great deal of it, which changes the balance of risk.
Free 2 min read
Inflation-protected bonds still lose when real yields rise
Buyers of inflation-protected bonds think they have bought safety from inflation. They have also bought duration, and real yields can move against them.
Free 2 min read
TIPTLT
Short-dated bonds reward patience when the next move is a cut
The front-end pricing I track against the likely path of policy.
Paid 2 min read
SHYTLT
Long bonds need inflation to become boring
The inflation components I watch for the turn to boring.
Paid 2 min read
TLTUUP
Bonds hedge equities only when inflation is quiet
The idea that bonds rise when stocks fall depends on inflation staying calm. When inflation is the worry, both fall together.
Free 2 min read
IEFTLT
Hedging costs decide whether foreign buyers take the dollar with the bond
The hedged versus unhedged arithmetic I track for foreign buyers.
Paid 2 min read
UUPTLT
Real yields are the honest measure of how tight policy is
The real yield levels I think separate tight from neutral.
Paid 2 min read
TIPTLT
Rate differentials explain the dollar until risk appetite takes over
Most of the time the dollar follows the gap between US rates and everyone else's. In a scare, it follows fear instead, and the model stops working.
Free 2 min read
UUPTLT
Rate cuts priced too early get handed back
When the market prices rate cuts well ahead of the central bank, the intermediate part of the curve is the first place the disappointment shows.
Free 2 min read
IEFTLT