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.

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.

Rising Treasury Yields Are Not a Threat to the Economy

The idea that higher yields are tolerable misses the fundamentals of the current situation, IMHO. The entire appearance of recovery is wholly predicated on reflation, not on fundamentals, or improving demand. This entire rally is based on nearly free money.

Rising interest rates across the curve will dampen the appearance of the residential real estate recovery (only the appearance, as there never was a real recovery anyway), and will not allow Commercial Real Estate, State, County, Municipality and Corporate refinancing when it is needed most. Do we really believe that if the Obama administration announced a balanced budget (based on predicted tax receipts this year, the budget would be slashed from last year's) and if the FED stopped its total life support of the banking system through its depression era power acronym programs, that there would be any appearance of recovery?