🎓Bonds 101🎓
We all have been hearing a lot about bonds and yield inversions and them being a marker for recession etc etc… but what is it all really?
Complicated stuff - NOT AT ALL!
Let’s go over some quick basics to understand it all and make you a Pro, shall we?… twitter.com/i/web/status/1…
We all have been hearing a lot about bonds and yield inversions and them being a marker for recession etc etc… but what is it all really?
Complicated stuff - NOT AT ALL!
Let’s go over some quick basics to understand it all and make you a Pro, shall we?… twitter.com/i/web/status/1…
What are Bonds and how do yields move:
Bond is nothing but a Loan Certificate, you loaned $100 of your money to someone and got a certificate back stating they will pay you in so and so time (Tenure) with so and so interest (Coupon).
Now when you try and sell this Certificate/… twitter.com/i/web/status/1…
Bond is nothing but a Loan Certificate, you loaned $100 of your money to someone and got a certificate back stating they will pay you in so and so time (Tenure) with so and so interest (Coupon).
Now when you try and sell this Certificate/… twitter.com/i/web/status/1…
What is Bond Yield Inversion?
Bond yield inversion is when yield of short term bond becomes higher than yield of long term bonds.
Why it happens you ask? - It’s simple…
if demand for short term tenure bonds is higher than demand for long term tenure bonds, the price of… twitter.com/i/web/status/1…
Bond yield inversion is when yield of short term bond becomes higher than yield of long term bonds.
Why it happens you ask? - It’s simple…
if demand for short term tenure bonds is higher than demand for long term tenure bonds, the price of… twitter.com/i/web/status/1…
Why is it a Recession Marker?
And this brings us to why people say that yield inversion is a marker for recessions.
Right now demand for long term bonds (10 year Treasury Bills) is higher than short term bonds (2 year Treasury Bills). And it has been like that for some months… twitter.com/i/web/status/1…
And this brings us to why people say that yield inversion is a marker for recessions.
Right now demand for long term bonds (10 year Treasury Bills) is higher than short term bonds (2 year Treasury Bills). And it has been like that for some months… twitter.com/i/web/status/1…
And all of this brings us to Scenario Right now!
10 year T-Bill yield is pretty much constant but 2 year T-Bill yield is going up and that’s reducing the inversion. What’s happening then?
In this case 10 year T bill doesn’t have much moving in terms of demand for the bond… twitter.com/i/web/status/1…
10 year T-Bill yield is pretty much constant but 2 year T-Bill yield is going up and that’s reducing the inversion. What’s happening then?
In this case 10 year T bill doesn’t have much moving in terms of demand for the bond… twitter.com/i/web/status/1…
Markets are all interconnected!
If you understand the logic you will not be fooled by complicated words used by ‘professionals’ !
Stay safe and invest well!
#Bonds101 #TradingOpportunity #Finance #Finance101 #Investor #Banking #GFC #GFC2
If you understand the logic you will not be fooled by complicated words used by ‘professionals’ !
Stay safe and invest well!
#Bonds101 #TradingOpportunity #Finance #Finance101 #Investor #Banking #GFC #GFC2
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