Bonds 01 (May 08 - Aug 10)

[winston]

Just noticed that the yield on the US 10 years are now down to 3.21%.

Not too long ago, it was around 4%.

This one I dont quite understand. If you are parking money in Cash, why are you parking it in 10 year US ?

Dont you know that the US is depreciating their currency ? Dont you know that US interest rates are going up ?

So the only reasons to be in 10 years is that you are expecting interest rates to go down ie. deflation.

[kennynah]

people are trading the treasuries causing the yields to flucs..there are also spreads that pros trade or funds use as risks hedge

it is not a like a FD...put money there and forget... only countries buy T-Bills once and leave it... liquidity is caused by bonds traders...

on a day when equities assets drop off...how can bond market possibly stay inactive?

[winston]

on a day when equities assets drop off...how can bond market possibly stay inactive?

Yes, why buy 10 Year US ? Shouldnt one be as short term as possible ?

[kennynah]

我不知道

Dont you know that the US is depreciating their currency ?

this one...i oso 不知道

[millionairemind]

I think the BIG FUNDS are just parking their money in US treasuries.... while they work out what they want to do in the near future. This is causing the yield to drop.

Money always flows back to the US in times of crisis.

Do you remember that at one time back in 2008, the funds were getting -VE interest just to park the money with the FEDs??? That was how scary things were back then.

[winston]

I think the BIG FUNDS are just parking their money in US treasuries.... while they work out what they want to do in the near future. This is causing the yield to drop. .

Agree. Again why park in 10 year US ? Shouldnt they be parking it in short term stuff rather than 10 years ?

[kennynah]

why short term? becos you keep thinking it is like FD...cant take out until maturity?

so, if it is tradeable ...then which ever that gives the safest and best returns gets the deal....

are you saying their 3 years gives better than 3.2%?

[millionairemind]

Perhaps the 10yr is the most liquid?

[kennynah]

or maybe... people just like round numbers...perfect "10"....

[winston]

If interest rates goes up, bonds drop in price.

And if interest rates goes up while you are in a 10 year rather than a Money Market Fund, you would be hurt more.

So the only time you want to be in a 10 year is when you think interest rates are dropping while you are sitting on the money.

And that's excluding any currency loss or gain.

So again, it's not logical to be sitting on a 10 Year.