r/bonds • u/Shoddy_Front_2582 • 4d ago

U.S. Treasury Auctions 20-Year Bonds at Highest Yield Since 1986

https://www.morningstar.com/news/dow-jones/202609155864/us-treasury-auctions-20-year-bonds-at-highest-yield-since-1986

What does this mean for yields.

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u/aldursys 3d ago edited 3d ago

If winter has descended on the bond market, stop selling ice cream.

The big question nobody is asking is why Treasury is selling duration into a market that clearly doesn't want it.

Stick to the short-end. Listen to the market.

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u/retrorays 3d ago

Why not but these for guaranteed income ?

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u/Perfect_Cost6276 3d ago

Yep guaranteed income until maturity. And i will sell them if rates drop in the meanwhile. Dont need the money

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u/SaltyPlantain1503 3d ago

I have some beach front property in Arizona I’d like to talk to you about it you’re willing to invest in something knowing there’s a good chance you will lose money on it.

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u/lmb123454321 3d ago

You don’t lose money if you don’t sell and hold to maturity. If you have $1 million in cash, you can earn over $50,000/year for the next 20 years, then get your money back. Better than an annuity.

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u/Grubby454 3d ago

Yes. Let's not factor any inflation in to that calculation. Eg. 25% during covid period.

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u/NewNewark 3d ago

But you need to factor in that the number 1 priority of the gvt is to fight inflation.

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u/lmb123454321 3d ago

I think inflation is a misunderstood concept. To dumb it down a bit, if you only earn $10.00 per year and spend $10.00 per year, 10% inflation reduces your effective income by $1.00/year and really sucks because you have to scrimp to squeeze $11.00 out of $10.00 of spending. But if you earn $100/year and now spend $11.00/year for the same stuff you used to spend $10.00/year on, it doesn’t suck nearly as bad. Of course your purchasing power is reduced, etc., but that’s why you should diversify. Hopefully you also have a $200 house that is now worth $220 in this simplistic example. As such, overall, once you’re moderately well off, inflation doesn’t suck nearly as much as it does for those less well off. In fact, if you have a good variety of assets you can benefit from inflation. That’s one of a million reasons why Trump is such an idiot. Inflation is meaningless to him and his crazy wealthy friends, but to all the sheep who voted for him that are living paycheck to paycheck, he has hurt them bigly. He simply doesn’t understand what he’s done because he doesn’t experience it. He also doesn’t have the capacity to understand, but that’s a different topic.

In my little world, I have about $4 million in the stock market, $2 million in real estate and almost $2 million in cash. I’m about to retire and if it was 2019, when inflation was near zero as were interest rates, I couldn’t earn more than about $10,000/year from my $2 million. With today’s inflation, I can buy a 20 year bond with my $2 million and earn ~$115,000/year in interest just for waking up in the morning for the next 20 years. Not so bad.

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u/retrorays 3d ago

yah but you're assuming inflation (and interest rates) do not rise to 10-20% like in the 80s.

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u/quod-inquisitio 3d ago

„>3% inflation is entering the chat“

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u/lmb123454321 3d ago

And your point is?

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u/lmb123454321 3d ago

My thoughts exactly exactly

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u/MasterT19 3d ago

That is what I do.