When the Federal Reserve cuts interest rates, many people ****** ume that bond prices rise in response. In reality, it's more nuanced.
Short-term Treasuries are more closely correlated with the federal funds rate and often do rise. Long-term Treasuries measured by the performance of the iShares 20+ Year Treasury Bond ETF (NASDAQ: TLT) may or may not.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
That's because they're more heavily influenced by economic conditions, not policy rates. Long-term yields reflect inflation expectations, risk premiums, government debt levels, and the direction of the U.S. economy. In other words, many moving parts are involved in pricing long bonds.
With markets anticipating rate hikes later this year, it can be helpful to look at what the Fed has done over the past few years and how the bond market has responded. Understanding this could help investors stay on the right side of whatever happens next.
#flashing
Short-term Treasuries are more closely correlated with the federal funds rate and often do rise. Long-term Treasuries measured by the performance of the iShares 20+ Year Treasury Bond ETF (NASDAQ: TLT) may or may not.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
That's because they're more heavily influenced by economic conditions, not policy rates. Long-term yields reflect inflation expectations, risk premiums, government debt levels, and the direction of the U.S. economy. In other words, many moving parts are involved in pricing long bonds.
With markets anticipating rate hikes later this year, it can be helpful to look at what the Fed has done over the past few years and how the bond market has responded. Understanding this could help investors stay on the right side of whatever happens next.
#flashing
2 days ago
