Why is the T-note yield curve messed up?

[noob_trad3r]

10 is 2.27 and 30 is only 3.39 Thats only a 112 basis point spread. Why is that happening and is it sustainable?

 

[Martinghoul]

Huh?

112 is actually pretty steep... Highest it's been is smth like 160, lowest arnd 0, mean 50, median 42 (using data from 1993 onwards).

 

[noob_trad3r]

Quote from Martinghoul:

Huh?

112 is actually pretty steep... Highest it's been is smth like 160, lowest arnd 0, mean 50, median 42 (using data from 1993 onwards).

Why would I want to loan for 30 years vs 10 for such a small difference?

 

[nazzdack]

Quote from noob_trad3r:
----10....
----30....
----112 basis point spread.
----Why....
----sustainable?

It's the same old "reasons":
1) The US can still be looked upon as being "creditworthy" despite the appearance of horrible underlying fundamentals.
2) There can be excessive speculation in the market that is bullishly biased. :eek:
3) Investors/traders are "looking for yield" and agressively buying longer-dated issues.
4) The FED may want to maintain the ~0% "target" on fed funds longer than people expect.
5) The 112 point spread may look "better" if you compare it to the 30-year yield instead of to itself.

 

[5yrtrader]

Quote from noob_trad3r:

Why would I want to loan for 30 years vs 10 for such a small difference?

Its small only in nominal numbers, the 30yr is actually yielding 50% more than the 10yr, its a big difference if you look at it that way.

5yr

 

[Martinghoul]

Quote from noob_trad3r:
Why would I want to loan for 30 years vs 10 for such a small difference?

Well, I dunno about you, but that's where the mkt is... If you think this spread should be higher, you know what to do, right?

 

[Daal]

Quote from Martinghoul:

Huh?

112 is actually pretty steep... Highest it's been is smth like 160, lowest arnd 0, mean 50, median 42 (using data from 1993 onwards).

what is the standard dev?

 

[Martinghoul]

Quote from Daal:
what is the standard dev?

36.1924 is what I see.