Wesley Mouch

What Does the Yield Curve Say About ETFs?

There are two reasons for yield curve steepening. The first, as noted by the author, is money searching for returns from higher risk investments. This is good, as it signals confidence and strength in the economy as a whole. High volume in riskier assets reflects this reallocation.

The second, is money fleeing really poor fundamentals. After all, the yield curve would be pretty steep if it was generally believed that longer dated products would expire worthless, or would be repayed in drastically devalued currency. This is bad, as it reflects a lack of confidence in the borrower or manager of the money supply as a whole.

So, with this current steepening, which is it? Probably not all of the first, but certainly some of the second.

Who's Smarter: Bond Guys or Stock Guys?

I would have answered that bond guys are smarter than stock guys before this last year's debacle. But now, some "bond guys" are buying treasuries at record prices from a borrower that has a pretty good record of repaying in devalued dollars, and does not appear to have any plans on changing strategy.

Bond Expert Thursday Outlook: Six Months to Christmas

John,

Thanks for the description of the bidding process.

I suspect the rule change is just as you note, to make less clear the role of the central bankers in the auction. The idea of bidding against a printing press does not sound too favorable to me.