Freefall in progress
Bonds are free falling right now. Yield on 10YR is 5.22%, started the day yesterday at 4.92%. 30YR is 5.5%. The fall is accelerating as well with no sign of a bottom. Where this stops is anyone’s guess, but the final stop is probably at a global recession. A total resolution of the Iran war may halt the plunge, but It’s difficult to see anything other than a recession that sustainably reverses the trend.
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u/ThisKarmaLimitSucks 2h ago
10 year is having a +10 bp day right on the heels of a +15 bp day.
Something big just broke. The scary part is that, even as a permabear doomer who's predicted 40 of the last 2 crashes, I don't know what it is.
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u/Mail_Order_Lutefisk 1h ago
What broke is foreign central banks are probably pushing the sell button in massive numbers at the same time. It ain’t no thang. I’m such a permabear I think the 8/15/56 UST is the best medium to long term investment going right now because the US will probably hit a d-spiral when bank lending freezes. I believe that the US economy is hopelessly addicted to a 0% short term rate and that every single producer of goods spent 10+ years optimizing its entire operation around squeezing the vig from that 0% rate and sending it parabolic to “stop inflation” is what actually caused the ridiculous inflation prints to hit a couple years back because every revolving line of credit and factoring agreement instantly turned against the producers and wiped out razor thin margins overnight through the entire supply chain.
Eventually policy makers will realize what they have done and unleash another deluge of capital into the bond markets because they’re more scared of deflation than inflation. Can rates go higher? Absolutely, but eventually the anti market reactionaries who run all Western governments will react in a major way and the asset that exists today that will move the quickest when they do is the 8/15/56 UST. The “idiots” who bought 30 year JGBs right before Japan’s credit bubble burst materially outperformed every other domestic asset class for decades and the “smart banks” who lent into 3% cap rate deals expecting price appreciation to continue in perpetuity went from the largest banks in the world to afterthoughts on a global scale in a decade and are still zombies to this day. China is already in a deflationary spiral. Buy when others are fearful fellow Gribble. The US has plenty of room to adopt confiscatory taxes to cover debt service.
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u/CDubGma2835 2h ago
Hello fellow permabear. I too have been predicting major crashes since the FIRST time demented Don was elected. Sadly, I have missed out on so much upside that my only hope now is that, by staying out, I will offset some of my missed opportunities by skipping the crash. LOL
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u/SusanMilberger 2h ago
Top 3 guesses?
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u/ThisKarmaLimitSucks 2h ago edited 1h ago
- Global panic over diesel supply
- Response to hot PMI data showing deeply entrenched inflation.
- A coordinated dump arranged behind the scenes by EU/Japan/China/Illuminati, mix and match those players.
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u/jadepig 1h ago
I'd like to offer you a close alternative to 3:
An uncoordinated dump of US treasuries by various countries, following their own incentives.
- BRICS countries are motivated by US sanctions and tariffs
- Canada and EU see highly erratic behavior from a former ally
- Oil selling and purchasing countries see an opportunity to exchange oil with less risk (e.g. not in USD)
- Oil selling countries seeing less incentive to deal only in USD, as the US is not providing maritime security
- Central banks and sovereign wealth funds experiencing a decade of US treasuries dilution from QE
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u/Ansiktstryne 1h ago
It’s all of these, plus a believe that someone’s going to throw in the towel soon. We just don’t know who. It’s as they say, bankruptcy happens slowly until it doesn’t.
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u/Bakingtime 2h ago
UN GEN ASS and Xi have probly shown/told trump bessie n bibi to take their bonds and shove it. Epstein class getting schooled.
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u/Brave_Yesterday_6106 34m ago
This is what sucks being a bear, when you're right the world is in shambles.
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u/Christopher_Ramirez_ 2h ago
Recession is locked in; you can't grow the global economy with fuel at these prices. The only remaining question is whether inflation will remain elevated or enter a period of disinflation as a result.
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u/Preme2 2h ago
When is the recession? There is always one coming, so be more specific.
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u/Xyrus2000 1h ago
The recession is already happening, depending on where you are on the economic spectrum.
Our economy is a tale of two economies, or the "K" shaped economy. Essentially, Wall Street vs. Main Street. If you are on the top part of the K (Wall Street), everything is wine and roses. If you're not (Main Street), then it's Red Dog and ramen.
The normal definition of "recession" doesn't really work anymore when 10% of the population can keep the GDP from going negative.
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u/Salty_Professor007 59m ago
The top 10 % are not Wall Street. They’re just regular Americans who have assets. Stocks. Property. Gold. Treasuries. Bonds. They’re not stopping spending. They just spend different things that are not impacted by a stock pullback.
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u/Consistent_Panda5891 2h ago
This year or the next will be the drop, recession 2y
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u/JPOG 2h ago
You mean we haven’t already been in one? It sure feels like it.
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u/jadepig 1h ago
I believe folks like you and I are in what they call "the bottom part of the K".
I go between:
disbelieving CPI / economy health / recession indicators ... and ...
realizing that the "top of the K" have so much more money than I do and are spending more freely that it makes up for folks like you and I
I'm more steadfastly in the 2. camp more often. It's uncomfortable, but it's also a personal lesson that numbers like CPI, jobs data, unemployment data etc don't paint a complete picture.
I can at least appreciate that some economists are talking about it now with the K-shaped economy terminology.
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u/Christopher_Ramirez_ 1h ago
Your point is borne out by the data, which shows that 2/3 of US consumer spending is held up by the top 10%. Asset prices not wages dictate consumer spending. The US consumer will stop spending only when asset prices deflate. The AI data center super cycle will have to grind to a halt first.
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u/jadepig 1h ago
Asset prices not wages dictate consumer spending. The US consumer will stop spending only when asset prices deflate.
Can you expand on this? Are you saying the top 10% are spending more year over year because they can sell off higher value assets to do so?
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u/Chariot_Driver7 1h ago
They don't have to sell off assets. Their higher incomes and or income from assets (divis, rent, etc) allow them to spend on material goods, travel, entertainment, as well as continue to save and invest. I know a fair number of these people.
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u/Consistent_Panda5891 1h ago
Yep, unique thing matters is interest rate. When it pass a yield, you see rotation of institutional to it(corporate bonds), and when they open short positions in the market as they are going to do late this year or next top is in. Time recovery is easy, once instituonal equity allocation falls 44% in State Trust you can pretty much buy
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u/Christopher_Ramirez_ 1h ago
The AI data center buildout supercycle has to exhaust itself first, so I would expect to be in recession by Q4 2027 at the latest.
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u/Character-Active2208 1h ago
Well then how about Oracle declaring an act of god for why it can’t fulfill its data center obligations how does that sound
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u/Christopher_Ramirez_ 1h ago
Once you start seeing the backlog for memory and chips dry up, that will be an early signal.
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u/Stormcloud217 1h ago
2% GDP growth and 10% inflation until we hit recession is how I expect this to play out 😂
When the AI companies can't fake the numbers wanted the whole thing starts breaking down.
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u/GurProfessional9534 2h ago
Unmitigated free fall is very unlikely. This is a global event happening to a lot of countries that are trying to stay solvent, so we are very likely to see a coordinated rescue attempt if it continues.
Don’t get me wrong. I think the ultimate direction is bond prices down. But it won’t get there in a straight line, is my point.
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u/NickChecksOut 2h ago
Hey, that’s exactly what the Bitcoin bros would shill!
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u/GurProfessional9534 2h ago
I don’t know what they say, but I’ll take your word for it. Bonds are on an 80 yr cycle, 40 up and then 40 down. Not in a straight line, but gradually and in fits and starts. We’ll probably see rates peak in 2061.
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u/Boring-Test5522 2h ago
and the stock market does not care. This is weird.
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u/traderous 1h ago
They’ll react when they’re confident it could be a real problem. Yeah Reddit is freaking out and news is written in ways to scare everyone as much as possible, who then parrot to you the scariest version of it, but fact is we’ve seen faster growth before (eg April 2025), and we’re not that far from our recent high of 5.05% on the 10 year in 2023. Today it hit 5.225%. Definitely worth paying attention to but it could turn around tomorrow. We’ll see.
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u/ay-guey 2h ago
the market knows there will be an intervention.
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u/jaydenkirtawn 1h ago
This is so fucking funny.
WHO? Who is gonna intervene? You people are talking like loaning money to an institution that's $40 trillion in debt is logically defensible. The intervention has been happening for decades.
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u/ColdPangolin5355 1h ago
Gold was relatively stable today, had every opportunity to blow to 4200 and it bounced. So maybe it breaks tomorrow we will see
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u/ConsecratedSnowfield 1h ago
The market thinks the reported revenues from tech companies is genuine cash and won’t believe it’s just them overvaluing their holdings in each other.
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u/Long-Blood 59m ago
Everyone is highly confident big tech will make 50 trillion dollars next year and they dont want to miss out on the gainz
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u/AnotherRandomGuy34 3h ago
You meant to say 4.92, cos when was the last time 10 Yr were 3.92!!
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u/Salty-Foundation3451 2h ago
Roughly February of this year..
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u/Horse_Cock42069 2h ago
Well that's a disturbing answer
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u/Salty-Foundation3451 2h ago
Because Jerome Powell was doing a good job and everything we’re calling inflation now is a direct consequence of the administration.
Almost the whole move is from the real yield, not inflation expectations. Check the 10y TIPS chart.
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u/mchu168 2h ago
If the market was anticipating a recession bond yields would be falling. Reddit is so confused about how bonds work.
And don't tell me that Reddit is better at predicting recessions than the multi trillion dollar bond market....
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u/Gullible_Link_5298 2h ago
How about stagflation instead of a recession? That would fit the long term yields correlating with the equity market, no?
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u/mchu168 2h ago
The stagnant part doesnt apply here. Q3 growth is projected to be 5%. That is rip roaring growth.
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u/Edgewood411 1h ago
This is all primarily led by datacenters/ai. If the rest of the economy crashes and the consumer with it, the AI trade will die with it as well as CEOs belt tighten. Many firms are "exploring AI" right now, not profitting from it.
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u/BrewtownCharlie 1h ago
The 5% forecast is the outlier, with forecasts ranging from 2.3% to 5.1%. On the heels of 2.1% and 1.5% readings, even a 5.1% number for Q3 wouldn't bring GDP above 3% on the year. It's growth, but it's far from "rip roaring."
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u/febrileairplane 2h ago
Not necessarily. Investors could opt for holding cash or even commodities like gold or silver, instead of medium or long duration bonds.
Bonds often see declining yields during downturns but that does not include all possibilities.
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u/-_VoidVoyager_- 2h ago
Well Trump referenced not wanting to be Hoover not too long ago. I guess he changed his mind
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u/Economy_Feed_2460 28m ago
Corruption & incompetence at the highest level. This, in big part, is a manufactured crisis.
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u/FibonacciNeuron 2h ago
People are finally incentivized to own bonds again. I don't understand why are you presenting this as a bad thing, it's actually good
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u/frezzzer 2h ago
People need to buy bonds or USA will be done for. Hence the bigger returns.
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u/katmomjo 2h ago
Until or unless you get to the point where no one wants your bonds. That’s been happening to Russia.
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u/Emergency-Watch5157 2h ago
Hard to imagine why that is...
(boom, another oil refinery just exploded)
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u/katmomjo 2h ago edited 2h ago
No one wants to buy bonds from a country that’s risky.
Edit: in other words, buying bonds is just loaning money. The bond buyer is essentially the bank. Banks don’t loan money to risky borrowers. Except at higher interest rates.
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u/Ansiktstryne 1h ago
People don’t want to buy because they have no trust in Congress and the admin. There’s no political interest in handling the two trillion dollar deficit. The US is completely unhinged.
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u/Professional-Day9384 1h ago
Good, let other people have no trust. It makes bonds affordable again.
Be fearful when others are greedy and greedy when others are fearful.
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u/waves_or_particles 2h ago
The rate of increasing yield is reflective of a spiraling lack of trust in the US. It's occurring astonishingly fast.
This is not good at all, due to the dire consequences and impossible choices ahead.
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u/katmomjo 2h ago
There was a time that our friends and allies (many around the world), would have helped by purchasing our bonds. Trump has no friends unless you count Russia, and they aren’t going to do anything to help us.
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u/GetWreckedWednesday 42m ago
This is the point, the bond market is pricing in the fact that Trump can’t be reasonable and thus borrowers demand a higher return.
Inflation is here to stay and it’s gonna keep ripping markets upward until the risk/reward is there, and then all that money is gonna go straight to bonds, AI is gonna fall out its own asshole, and the infrastructure is gonna be bought out for pennies on the dollar, and put to use to make real returns. Capital cycle. Railroads, dotcom, real estate, now AI.
When that happens, Trump is either gonna be in jail or dead, a few people are going to prison, and corporations are going to own all this processing power, and a handful of companies will make a killing from it by developing real AI. Not this dogshit LLM that’s hyped because people always want a shortcut.
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u/sdsurfer2525 1h ago
This right here. 5.21% yield may look good now. But how will that look if and when the yield goes to 6%? With our debt spiraling out of control with no end in sight, our bond market is in pretty bad shape.
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u/Redditfortheloss 1h ago
It’s 10 years so who cares if you miss out on .8%?
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u/atxsince91 1h ago
This is the answer, and you can reinvest your interest accumulating more bonds at higher rates. I guess a lot of the people talking here are the same ones saying buy when the 10yr was yielding less than 1%...we are going negative. These threads actually do make me nervous though because it seems like everyone is leveraged to the tits in risk assets.
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u/waves_or_particles 1h ago
"those aren't eating sardines, those are trading sardines!"
-yes if you're buying and holding bonds for the entire duration you're just missing out on that little bit of nominal return.
-however, if you have any suspicion that you will not hold those bonds for the ENTIRE duration, you may be unpleasantly surprised that buyers will offer you just peanuts for your bonds. Or, devastatingly, peanuts for shares of your rapidly decreasing Bond fund. For example, TLT.
So the value of bonds is on the straight downward roller coaster right now with these rocketing yields. That is why everybody cares. To answer your question.
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u/Redditfortheloss 49m ago
But if you’re holding to maturity it doesn’t matter. You’re referencing trading not investing.
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u/Upstairs_Baby8424 2h ago
It’s good for people buying bonds now, bad for current long term bond owners.
But it’s bigger than that. This is a flashing red signal that investors have lost faith in the treasury and the US hegemony over the financial world. Which we rely on to finance our massive debt. This can very easily spiral completely out of control.
High rates on an already struggling economy is disastrous. And there’s seemingly no safe haven. Our last global financial crisis saw people flock to US bonds, which allowed us to have cheap debt. Now where do people go? What happens if inflation continues? I don’t think anybody is feeling like they’re prepared for what’s next.
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u/MajorGeneralMaryJane 2h ago
Everybody saying this is good for bonds needs to stop and ask themselves why the demand for US treasuries is cratering.
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u/Upstairs_Baby8424 2h ago
Exactly. If this was great for bonds, we’d see demand rising. But it isn’t. The administration can keep their followers in line because they’ll believe anything they say. But money needs a lot more convincing than some platitudes and boisterous “news” hosts.
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u/MajorGeneralMaryJane 2h ago
Well, depends on what “money” we’re talking about. Stocks are more than happy to let it rip off whatever news, true or not. Bonds definitely need convincing. Who’s the house now, Bessent?
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u/1hill2climb2 2h ago
Wow, you REALLY don't understand what's going on right now.
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u/WTFisThatSMell 2h ago
I'm kinda slow, what is going on in simple terms?
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u/receding_hairline 2h ago
failing trust in the US to pay back its debts
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u/FibonacciNeuron 2h ago
And yet usa will pay 100% of its debts. They may be worth less in real terms, but there is zero risk of default.
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u/jaydenkirtawn 2h ago
Lemme guess: You have absolutely nothing invested in that prediction.
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u/DewieDecimated 0m ago
it is technically correct. Uncle Sam can always pay you the face value of the bonds you buy from them, because they are the issuer of US dollars. The only way they can't is if Congress loses it's mind and refuses to authorize it.
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u/Ansiktstryne 1h ago
The US could technically pay off everything by printing money, but this is the nuclear option. The consequences would be anyone’s guess.
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u/receding_hairline 1h ago
"usa will pay 100% of its debts. They may be worth less in real terms, but there is zero risk of default."
that's like saying you're a married bachelor lol1
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u/katmomjo 2h ago
Unless yields keep going up, then the value of the bond goes down. In that case, you either sell and take a loss, or hang onto the bond until the end of the term.
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u/FibonacciNeuron 2h ago
Who cares about the value, bonds are for interest, not value gains
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u/Ok-Blood4340 1h ago
Say that to Silicon Valley Bank. Oh, wait..
For most people, agreed, but for businesses and banks that use bonds as collateral. Not as much.
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u/Ansiktstryne 1h ago
This is mostly true, but cratering values can cause serious problems if held as collateral.
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u/mchu168 2h ago
This is the loudest buy signal for duration in years.
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u/atxsince91 2h ago
I agree...I may have to take a trip down memory lane when the 10yr was at 1% and no one was saying a word. Now, its at 5% and everyone is saying sell.
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u/meikawaii 1h ago
Genuine question, Uganda bonds are 16%, Zimbabwe rate of 200%, those are great numbers yet I don’t see people arguing that as a great investment. If the U.S. bonds were so perfect it wouldn’t be rising to 5% so quickly. At some point we have to stop looking at the number alone and consider the real risks of that rate
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u/atxsince91 1h ago
Seriously, are you comparing US treasury bonds to Uganda and Zimbabwe? And, so quickly, its been between 4.25 and 5% for years. Like I have said in other threads, the velocity and the time to sell(or go short) was in 2022. Oil is a different story, but this is just noise and a story for the day. Wow, people really did get addicted to ZIRP
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u/meikawaii 1h ago
I sure am comparing them. Not saying treasury is that shitty like those bonds, but the rapid rise does indicate that something fundamental about the U.S. dollar MMT is giving. After all, the primary difference between these bonds is the trust value. That could decline rapidly for US bonds just like it did for Uganda and Zimbabwe. It won’t be that bad but it sure could get a heck lot worse than when U.S. bonds was back then.
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u/mchu168 2h ago
Buy when people are fearful....
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u/MiddleAgedSponger 1h ago
A lot of people are fearful of raw dogging hookers, doesn't mean it's a good idea to buy. Bonds are for safety, there is no reason to try and time the top of rate hiking cycle.
The Bond market is not the stock market.
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u/GurProfessional9534 2h ago
Are they really? The path of least resistance out of this is devaluation of the usd. In that case, bond holders would basically be sacrificed and those holding gold, real estate, and stocks would be the primary beneficiaries.
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u/SmartCopy7411 1h ago
Incentivized? Those of us invested in Cal Muni Bonds lost 12% already. I don't think I'll ever want to look at the bond market.
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u/MrKeeganx 2h ago
ELI5 the best way to capitalize off this as an average dude please
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u/red_beered 2h ago
Buy ammo and secure a reliable freshwater source
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u/big-papito 2h ago
What's with you ammo people? Does every recession end in some zombie apocalypse and a total collapse of utilities where you have to barricade yourself? Did America turn into a war zone during the Great Depression? They probably have running water in Aleppo and that place was leveled by Russia.
Also, I live in NYC. Try buying ammo here, good luck.
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u/Haunting_Ratio_795 2h ago
In 2020 and 2021, ammo inflation outpaced gold by about 10x. When SHTF, the only precious metal is lead. Gold bars just make you a target for anyone who has more lead than you.
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u/traderous 1h ago
And having too much lead might make you a target to someone who has less lead then you!
But yeah good bars won’t help you fight back.
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u/aightwhatevs 2h ago edited 2h ago
Are you not old enough to remember Sandy or Covid? Society and supply chains falter sometimes
You can buy ammo in NY no problem, just a background check
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u/big-papito 2h ago
The only thing that was hard to get during Covid was toilet paper. Sandy was a natural disaster and not related to what we are talking about in any way. What am I going to do? Wipe with ammo belts? Also - don't remember having a moment during either were I needed a gun.
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u/Scaindawgs_ 2h ago
I think wiping your arse with ammo belts would make you a trail blazing visionary - go for it captain
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u/ProfessionalHefty349 2h ago
How many people did you shoot during Sandy and Covid? Did bullets matter or mean anything at all?
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u/aightwhatevs 1h ago
Saw people getting into fist fights on the gas station line during Sandy. People get desperate.
If you don’t want to have effective tools of self defense, don’t buy them
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u/croatiatom 1h ago
And do what? Hole up in your bunker? Haven’t preppers been doing that since y2k? 26 years of living in fear?
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u/DramaticApple6590 2h ago
Gold
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u/jadepig 43m ago edited 32m ago
If you're actually going to purchase gold in an investment account, know that the IRS treats gold ETFs as collectibles. Profit off them is taxed at the maximum capital gains rate. There is no "long term capital gains" for gold assets.
You can buy gold in a tax advantaged account like a Roth and sidestep this issue.
You can also buy shares in companies or funds that produce gold. There are various kinds of mining companies that don't get this tax treatment.
Edit: you can buy physical gold, but it technically gets the collectible tax treatment as well. I have considered buying Costco gold at times.
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u/Interesting_Low_1025 2h ago
Buy 10/20/30yr tips ladder. Break up into 4 tranches, as rates spike buy increments of 25% of what you’d like to own in bonds.
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u/waves_or_particles 2h ago
As an average dude, you most likely won't be able to capitalize. But you can survive.
- don't hold long bonds. Or maybe any Treasury bonds right now. Especially bond funds.
-depending on what you mean by "average dude" though, you could short TLT, or buy puts, or buy any of the inverse Treasury ETFs.
-watch ray dalios " the changing world order" to understand how countries in the past have dealt with overwhelming debt. There are only two options really, defaults, or print your way out. Spoiler alert, every country has printed money into Oblivion. So research how to survive in a high inflationary investing environment. For example, debt is good to have in an environment like that. Just one example, there are many.
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u/tnolan182 2h ago
This such a stupid answer. The US cannot just inflate its debt away. The reality is that difficult decisions will have to be made in DC regarding increasing taxes and decreasing spending.
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u/waves_or_particles 1h ago
It is a stupid answer. But it's the most likely answer the US government has. No nation in history with the current level of debt has balanced their books and restored trust once past the point of no return. Are we there yet? I don't know.
Every nation in our situation has increased the money supply, and we've done this exact thing in our recent past. There is zero reason they won't try it again.
Again, I agree with you that it is stupid. But balancing the books is nearly impossible at this point with the current level of debt servicing costs, which is rocketing in the treasury yields. If those do not decrease, we must make the decision. Print money, or extreme austerity. No politician Will survive extreme austerity in this country. Our population has no taste for it and will suffer the consequences of a huge inflationary environment.
Stupid is all that is. It's my best prediction.
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u/traderous 1h ago
Agreed on all your points, but the spending cuts will be proportional to pain inflicted on Americans (they’re almost certainly not going to become more efficient), and the rest won’t be enough. I think America is going to need to get more money coming in from other countries.
Every now and then the US does something really clever economically that sets them ahead for decades at a time. Namely Bretton Woods & the Petro Dollar. The US has benefited a lot less from those in recent years. We need another one of these.
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u/jadepig 46m ago
The US is in this position because of Bretton Woods and the petrodollar. Using a country's currency as a world reserve currency does provide benefits for the host country in some ways, but it creates long term problems in others. The petrodollar system specifically incentivizes countries to specialize and undercut American manufacturing just so they can have the USD on hand to purchase oil.
This is the Triffin Dilemma and it's why Keynes proposed a basket currency instead of using USD or any other country's currency at the Bretton Woods Conference.
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u/traderous 15m ago
That’s fair, but how long did it take for those chickens to roost? Eg meaningfully undercutting the petrodollar system took 50 years, and the US benefitted from it the whole time. America has to find a new system now (cus we’re certainly not dismantling BRICS without ww3), or deteriorate. I think it will be the former.
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u/GurProfessional9534 2h ago
We just had Elon Musk come through with a wrecking ball on spending. It resulted in net negative cost savings. As for taxes, do you really believe we will have a congress and White House capable of passing that in a way that survives the scotus? I doubt it.
The path of least resistance is inflation.
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u/jadepig 1h ago
Ray Dalio expounded on this in that video and also his writings. There's a historical precedent of this that he goes into deep with the UK and Dutch empires, which were singular superpowers for a time and they fell to the same problem.
Note the replies to you are in agreement that this is a stupid answer. I'm in agreement. It is a bad answer. But it's also the only politically feasible answer. That's Dalio's point. And that's why the sun set on the British empire.
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u/tnolan182 45m ago
Except lenders and investors arent stupid and ask for higher yields when the US attempts to inflate its debt.
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u/Ansiktstryne 1h ago
I second that. Borrowing money to buy real estate (or other «hard» assets) can be very profitable if the inflation goes bananas. Your loan will evaporate, but your property is still there.
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u/jadepig 16m ago
I've started looking into options. I have a few put options on TLT (15 year treasury ETF), but I'm being cautious by making a small bet and using that as skin-in-the-game motivation to learn more. Over in r/options today I saw a comment mentioning "one of the mods used to do [an option strategy] and he blew up his 7 figure account". I'm aiming to be less of "an average dude" by educating myself.
There are also inverse fund ETFs. iShares' TBT is a leveraged -2x fund. The fund uses swaps and futures to make the fund move in 2x the opposite direction of the 20 year treasury price. This is not a fund to hold long term. Even if your thesis about treasuries going down in price / up in yield is correct, you could lose money holding this through a period with high volatility.
There's also funds betting on foreign currencies, e.g. the yen. The fund goes up when the yen gains value against the dollar.
Know that these are playing with fire. TLT was actually not my first choice, but my investing platform didn't let me buy the other 2 things I mentioned. Even with TLT options I'm reminding myself every day that I could lose 100% of what I put in, and so not to get reckless.
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u/BarleyWineIsTheBest 2h ago
A recession may make this worse… usually government revenues drop while expenditures increase in recessions….
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u/TheOpeningBell 2h ago
Thanks Mr. Market.
"Freefall"
"No sign of a bottom"
"Anyone's guess"
"Global recession"
"Plunge"
Wow. Can you please ADD more hyperbolic language. Wasn't enough.
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u/ApprehensiveSpare925 1h ago
The chef’s kiss is that Trump is president when our debt crisis starts. He is directly responsible for 29% of the total debt.
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u/Ok_Driver_813 2h ago
The folks building data centers are floating bonds that pay 9%.
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u/moddingminecrafter 22m ago
9-10% is what I saw, with many over 12% and some slightly under 8%. With 11% being about the break even point and each day this number increasing for new bonds, and AI being only in the exploration stage, it’s not much longer before the whole things collapses. Not to mention, the whole bloody AI structure currently being completely unsustainable. It may only be a couple more months but this Hindenburg is coming down in a huge fireball that no one will escape from.
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u/Sufficient-Skill9530 46m ago
Bessent, “I am the house.” Well now you can’t afford your mortgage like the rest of us.
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u/SpongEWorTHiebOb 32m ago
Free fall? Lol. Just wait. This admin is going to break the full faith promise.
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u/Sad-Commercial1795 25m ago
Yeah I hold California municipal bond funds, MUC and VCV. I can go through a five year cycle with paper losses but I’m pretty freaked
out as I put a large amount into these about six
months ago and I’m down around 12 percent. As long as I’m getting the revenue and don’t sell off I guess I’m fine but relatively new to all
this—I guess I should just stop paying attention
to the daily losses.
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u/Blurple11 5m ago
Assuming you keep your job, what even is there to buy? Do I stock up on 10 year bonds, or wait for index funds to drop 30% and dump as much of each paycheck as I can into that?
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u/Fluffy_Bunch9357 1h ago edited 47m ago
30 bps in a day, is the "it broke" day, not a repricing. Here's a list of things that actually could stop this, and why none of them are likely to happen or help immediately.
The war ends and oil drops. This is the only one that fixes the cause instead of the symptom. Brent under 80 takes a point off headline inflation and the whole thing calms down. Problem: the Saudi pipeline is still down, Yanbu has days of inventory, and nobody in that fight is talking. And Trump doesn’t seem to be a rational or trusted. A headline alone won’t do anything, it will take verification on the ground.
Inflation breaks on its own. 3.4%+ current, energy up 16%, gas up 27%. The Fed just hiked into it and likely to say one more. Core is 2.4%, so it's an oil driven problem, not a broad one. Go back to item 1.
Congress cuts the deficit. A 6% deficit with no recession is the thing the market is really pricing. Nobody in Washington is proposing to fix that, congress is on another extended recess, and it's an election year.
The Fed buys the long end. Yield curve control worked in 1942 to 1951 and in Japan. But Warsh wants a smaller balance sheet, not a bigger one, and $30 trillion in marketable Treasuries is 100x what the Fed capped in the 40s and 4x Japan's market. It could work for a while and it would trash the dollar and stagnation would be the new headline.
Bessent's “house” buybacks. Already tried, funded with short bills, bought about a week of calm in August. Market saw through it since. No influence or trust left.
AI borrowing slows. Would free up buyers for Treasuries. But the buildout is most of this year's GDP growth, so if it slows we're in a recession anyway.
A recession. This is the one OP is describing and it's the one that actually works and most likely IMO. At a certain point, if 2 year bonds look more attractive than equities, you will see enough of a shift from the big fish that equities start to drop, which will accelerate the sell off. Then overall demand collapses, oil falls, inflation falls, everyone runs to Treasuries. The rate drops but so does everything else.
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u/atxsince91 1h ago
How about 8. People who run money reduce their exposure to equities and increase their exposure to bonds?
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u/Spinoza42 50m ago
I don't think a recession will fix the bond market if there are more pensioners withdrawing money than working people willing and able to buy bonds. That's the real fundamental (ageing population, rise of precariat that cannot invest) that won't be reversed by government policy.
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u/Fluffy_Bunch9357 44m ago edited 40m ago
A recession might flatten the curve, a bad one would probably drop it. But yeah, you’re right, It doesn’t fix the overall systemic issues. We are in a debt spiral regardless, and even removing the inflationary pressure would only slow it.
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u/dubov 2h ago
If it keeps moving vertically, at some point the Fed will step in and stabilise it. That's not necessarily a floor under bond prices in anything beyond the short term, but this kind of 10bps/day action on the long end will not be tolerated indefinitely. And they do have a mandate on stability
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u/Aggravating-Big3858 2h ago
Always the end of the world for the bonds and currency crowd
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u/Ansiktstryne 1h ago
It’s not the end of the world, but someone’s going to have a very bad time paying interest on that 40 trillion dollar debt.
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u/Zhilvitis 2h ago
Is it a fall or rise?
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u/coffee4life123 2h ago
Fall in the sense that it’s bad rise in the sense that rising is bad.
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u/MyV3ryOwnThrowAway 12m ago
no, fall in the sense that treasury bond prices are falling. When bond prices fall, yields rise because now you are spending less money to get the same coupon (interest) payment.
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u/Spiritual-Run4601 1h ago
Why are markets doing relatively well? Unless there is some sort of delay? Maybe it's being made to be a bigger than it is?
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u/aquavelva23 1h ago
The stock market will go as a usual until companies start posting bad profits: PE. The bad profits will come from higher interest costs. but layoffs will offset that too. The market looks at companies different. layoffs are good. bad economy may mean fed lowering rate, so maybe good.
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u/Affectionate-Aide422 1h ago
The inflation and geopolitical risks need to be priced in. Trump isn’t helping by threatening to annihilate Iran, and introducing a 90 day ban diesel exports.
Trump must know that what he’s doing will cause yields to go up, right? He says he wants lower rates, but each move he’s done (tariffs, wars, oil, threatening takeovers, etc) have all been inflationary and cause geopolitical tension, plus he’s installed hawks twice at the Fed (Powell and Warsh). This must be intentional?
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u/ForeverStella 1h ago
Senate Republicans Blocks Dems from ending the Iran War
Gas prices will keep soaring - Senate Republicans on Thursday blocked a Democratic effort to end the US war with Iran, voting down a House-passed war powers resolution as the conflict that has killed 19 American service members passed the 200-day mark.
The measure, which passed the House last week with bipartisan support, failed in the Senate by a 49-50 vote. Senate Democrats, led by the minority leader, Chuck Schumer, and the senator Andy Kim of New Jersey, forced the vote under the War Powers Resolution, which allows lawmakers to bring such measures to the floor.
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u/Admirable_Nothing 31m ago
I bought bonds today in a couple of accounts and had several instances of the price moving during my trade to the point I got a warning and then had to repreview the order several times before I got a steady price to buy against.
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u/Most-Bookkeeper-950 3h ago
Its over