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Bonds down nearly $1T this week. Down nearly $5T from ATH

When every monkey blindly believes you should just hold 40-60% of their portfolio in an asset being propped by central banks.. look what happens when that ends and rates climb

Just look at what happened to bonds in March 2020 and during the stimulus. Could drop another $10T without central bank manipulation

 

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Your point 2 and 3 contradict point 1 from the time horizon of anyone younger than boomer

If raising rates are what control inflation and yet rates are trending down for decades because the markets cannot handle raising rates

We have been kicking the can down the road but eventually we have to face the underlying issue.

Of course the boomers in charge are not worried. The timing is perfect for them
 

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One should always be cautious in "overcrowded" trades. Absolutely everyone these days is worried about high inflation, and everyone wants investments that do well during inflation.

This kind of situation tends to result in the market under-pricing the alternative scenario. A position in bonds would benefit from moderating inflation.
Bonds have been an overcrowded trade for a long time because everyone bought into the 40-60% bond allocation "rule".

Then you have the central banks buying bonds to lower interest rates. They are literally manipulating the bond market and people put 60% of their wealth into that

As a contrarian I could see now being a good time to buy some bonds but it hasn't been a good trade for a long time. The upside potential is capped by central banks

There are much better places to store dry powder imo.
 

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Bonds are for people who can't do math

They just heard everyone should have x% bonds and buy them without checking the math. Bonds have risk but are too saturated from the blind faith in gospel of bonds

This was evident to anyone who understood rates long before the bond crash
 

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Looks like Japanese yield curve control just failed as 10-year rocketed up 80% in a day

Europe still has negative rates and just held an emergency meeting to save sourthern Europe with more QE. Central banksters are losing control. Higher rates could break a lot of things in legacy finance

How long before the J-Pow pivot 2.0? That would be a glorious reversion. Let's go J-Pow
 

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Do you mean him chickening out and pausing or cutting rates? I worry about this too.
I feel like even a hold, or a hint of holding, would cause a massive reversal because markets are pricing forward increased rates

I don't know when that will happen but if markets start to collapse they don't have much choice

The last time they tried to taper pre-pandemic it failed. How is it supposed to work now?
 

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Bond market is getting volatile in Japan

Not a lot of mainstream coverage yet but sounds like BOJ printing yen like there's no tomorrow (thanks Japanese boomers) while the rest of the central banksters are trying to tighten

Europe is not looking so good either
 

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I have kept my durations short but for the time being rates are not moving as fast as they did after the first hike. another 75 in July should mean better rates.
Seems the market priced in the expected rate hikes. Things can get volatile if the Fed suddenly changes expectations. I don't expect it but their action and words have so much impact

Bond rates in Japan are apparently starting to go crazy. Not sure what is happening maybe BOJ is losing control of the market
 

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I'll bet that if the Fed even implies that they might back off QT, the market could go crazy, all asset prices to the moon.

This will be an interesting year either way.
That's the thing we've barely started and look at the market

I actually want a bear market both for tax reasons and accumulation reasons. Going to the moon that fast is no good

It's like some kind of rubber band effect or vehicle swerving back and forth before losing control
 

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Beware that the unwinding of QE picks up steam in September. The Federal Reserve has started reducing their balance sheet but they are taking baby steps. The real unwinding begins in Sept. We've never seen this done at this scale ever before in history, and economists have no idea what the impacts might be.

I'll bet that if the Fed even implies that they might back off QT, the market could go crazy, all asset prices to the moon.

This will be an interesting year either way.
I think we could be in for a massive economic whiplash - the perfect storm is brewing

The Fed is way too slow to react to past data that is changing in real time before their changes even take place. They are out of sync and there are massive economic disruptions coming

By the time they get around to unwinding in Sept they might have to start again :LOL:
 

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Bond market currently doesn't believe the Fed will raise rates as much as they claim

Bond market is calling J Pow's bluff.
 

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Actually, what is happening is the market is factoring In an increasing expectation the Fed will continue to raise and bring about a recession.
Actually.. fed fund futures are expecting the opposite.

But I'm looking further out so we are talking about different things here

Most disagreements in finance I find are people with different time horizons
 
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