TheMotorcycleBoy wrote:dealtn wrote:Just remember if you are ever on the Serengeti and chased by a lion you don't need to run faster than it to survive, you just need to be able to run faster than somebody else (until the next time).
Sure. By the way if you get the time, can you take a look at this https://www.yardeni.com/pub/peacockfedecbassets.pdf my friend, and take another look at Page 9 please? This page is titled "US Treasuries & Agencies Held by Central Banks". Can you see the redline toward the right of the plot? Check the section equating to now, i.e. beginning of April 2020. It seems unreal. The gradient is stupendous - noticeably steeper than around 2009 and 2010 (must be "easing" regimes!). I can only imagine that the gradient of approximately 89 degrees is equivalent to the recent $2.2Trillion stimulus just signed. Correct?
Also, in the table I shared in my earlier viewtopic.php?p=297636#p297636 i.e.TheMotorcycleBoy wrote:
I calculated the yield (I think!) that the purchasers actually demanded of these very recent gilt sales (I multiplied the coupon rate by nominal_value/value_actually_raised) and I deduced that the investors requested a lower yield (about 1%) for the 21yr maturities than for the 8 yr ones (about 1.6%). Is that a sign of "inversion?". As in, "Inverted Yield curve?"
Yes it's crazy. But if you want unconventional policy to work it's better to go (very) big, as otherwise you just disappoint the markets, who will always want more. At the moment it's a bit like a surgeon doing whatever to keep a patient alive, worrying about how he recovers is for later.
Haven't checked the yields but yes that is an inverted yield curve. The long end had been distorted for what seems "forever" and inverted in the UK due to "pensions". The very short end is about zero I would imagine, so it actually isn't inverted bar the long end distortion, and the long end is very interesting. Is the inflationary cure in the long term enough to outweigh the deflationary drop in demand in the short, and possibly medium term? We don't know but expect long gilts to be quite volatile, when we get to focussing on the "recovery" stage.