Author Topic: The meaning of 3% Treasury-bond yields  (Read 355 times)

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Offline Free Vulcan

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The meaning of 3% Treasury-bond yields
« on: April 29, 2018, 03:36:39 PM »
ROUND numbers would be irrelevant if investors were rational. But they are not. This week the ten-year Treasury-bond yield passed the 3% threshold for the first time in over four years and investors shuddered. Their worry is that the long downward march in yields, which began in 1982, may at last be over. Is it?

That question is not of interest just to bondholders, for whom higher yields mean lower prices. Government-bond yields set the benchmark for the borrowing costs of companies and consumers. When they rise, the weakest companies and the most indebted consumers are likely to get into difficulty. If the cost of government borrowing rises, it becomes harder to finance budget deficits. Politicians may be forced into cutting spending or raising taxes. If the breaching of the 3% threshold were to presage an abrupt rise in yields, there could be trouble ahead (which is why stockmarkets wobbled this week). Yet a bond-market bloodbath seems unlikely.

Read more at: https://www.economist.com/news/leaders/21741144-there-no-need-panic-about-government-bond-market-meaning-3-treasury-bond-yields
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Online DB

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Re: The meaning of 3% Treasury-bond yields
« Reply #1 on: April 29, 2018, 04:07:21 PM »
"Politicians may be forced into cutting spending or raising taxes."

This is false and easily seen from recent history.

"Quantitative easing" is what they do. A nice way of saying printing more money without any backing - without actually saying it in terms people would recognize...

Offline Free Vulcan

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Re: The meaning of 3% Treasury-bond yields
« Reply #2 on: April 29, 2018, 04:44:07 PM »
"Politicians may be forced into cutting spending or raising taxes."

This is false and easily seen from recent history.

"Quantitative easing" is what they do. A nice way of saying printing more money without any backing - without actually saying it in terms people would recognize...

And that is the rock and hard place we are in financially. Keep running deficits, interest costs eat up tax revenues, the world dumps our stocks, bonds and currency. Print money, we paper over the debt, the world dumps our stocks, bonds and currency.
The Conservative Fist: https://twitter.com/arguedpolitics - follow me and I'll follow you.

Offline SirLinksALot

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Re: The meaning of 3% Treasury-bond yields
« Reply #3 on: May 01, 2018, 11:53:26 AM »
If you had money, would you buy a 10 year treasury making you 3% TAX FREE or put your money on a Company paying a higher dividend but with your dividends TAXED and the risk of market swings?

THAT is the question investors face today

Online Drago

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Re: The meaning of 3% Treasury-bond yields
« Reply #4 on: May 01, 2018, 06:46:42 PM »
You must be talking state/local "tax free" on T-bill interest?  Pretty sure T-bill interest is taxable by the Feds.

https://www.investopedia.com/ask/answers/013015/how-are-treasury-bills-taxed.asp



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