Why did QE cause treasuries price to drop and not increase?

[HopelessTrader]

 

[zdreg]

Quote from HopelessTrader:

these holders of debt must be punished for buying into this bubble. the market will eventually destroy them.

 

[oldtime]

also, Ben's diabolical plan is working. If you want returns, you better get out of bonds and into something else.

very little cap appreciation left in bonds

if you want me to buy them for yield you better give me a better price

 

[zdreg]

Quote from oldtime:

also, Ben's diabolical plan is working. If you want returns, you better get out of bonds and into something else.

very little cap appreciation left in bonds

if you want me to buy them for yield you better give me a better price

"very little cap appreciation left in bonds"

at these levels even a small absolute move in interest rates on leverage can result in big profit or losses.

 

[Covertibility]

Treasuries may not have much more to go but corporates are a different story.

It wouldn't surprise me if corporate AAA yields make another ~10 year trough.


If you're wondering, the BAA's

 

[Ed Breen]

That chart of the owners of Federal Debt does not distinguish between different forms of debt and maturity. Most the Fed purchasing of debt has been in longer maturities, while troubles with bank solvency, money market funds and the general process of deleveraging has driven private capital and foreign invested capital into short term maturities with the goal of capital preservation over yeild. Private money, corporated operating deposits, and surplus earnings not invested are increasingly being placed into short term government security funds...so the charts do not give you a good picture about what is really going on because they aggregate all these important and discrete issues.

The process of deleveraging, deflation, itself is the process of moving capital from tangible assets and long financial assets into shorter term liquid accounts, cash being the most short term (demand debt) and short term treasuries being a cash proxy.

 

[oldtime]

Quote from zdreg:

"very little cap appreciation left in bonds"

at these levels even a small absolute move in interest rates on leverage can result in big profit or losses.

yes, there is always opportunity both long and short for traders on margin

but for investors, bonds have become increasingly unattractive

no yield, very little room left for rates to go down and push principal up, all the risk is that rates will go up in spite of the fed

and that is why old people in Florida are just now refusing to roll over their cd's and are buying their first dividend paying stock

 

[Ed Breen]

Just in time to be in when earnings go down and multiples are compressed.

 

[oldtime]

Quote from Ed Breen:

Just in time to be in when earnings go down and multiples are compressed.

it certainly doesn't seem like it is going to end well

 

[HopelessTrader]

Quote from Ed Breen:

That chart of the owners of Federal Debt does not distinguish between different forms of debt and maturity.

The reason I posted the chart was because when you said, "When you sell IOUs to yourself do you really expand the market for IOUs, do you really expand the supply of IOUs if you buy them yourself? What is the difference bewteen that and not ever creating the securities in the first place. Think about that for a while.", I went to wondering who was buying the debt..