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#11
11-10-2006, 07:00 PM
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Re: the bond report (what am i missing?)
the simplest explanation is that they will always cite a reason in a headline, if employment was revised upwards and yields fell then they will say "10 yr yields are down today as the employment report was revised upward". just like with the stock market you always see "stocks fall/rise as (fill in the blank)". that doesn't mean that whatever reason cited in the headline is the reason the market moved a certain way.
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#12
11-10-2006, 07:23 PM
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Re: the bond report (what am i missing?)
[ QUOTE ]
the simplest explanation is that they will always cite a reason in a headline, if employment was revised upwards and yields fell then they will say "10 yr yields are down today as the employment report was revised upward". just like with the stock market you always see "stocks fall/rise as (fill in the blank)". that doesn't mean that whatever reason cited in the headline is the reason the market moved a certain way. [/ QUOTE ] I agree with this.
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#14
11-11-2006, 02:46 AM
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Re: the bond report (what am i missing?)
[ QUOTE ]
the simplest explanation is that they will always cite a reason in a headline, if employment was revised upwards and yields fell then they will say "10 yr yields are down today as the employment report was revised upward". just like with the stock market you always see "stocks fall/rise as (fill in the blank)". that doesn't mean that whatever reason cited in the headline is the reason the market moved a certain way. [/ QUOTE ] right... see i definitely interpreted his statement of "B acts as A comes in at" as "A comes in at X, which in turn caused B to act." a friend of mine is into bonds and he thought the same as you. in the end, he couldn't have meant it as a direct cause. oh well...at least i got to exercise my brain for a few minutes today. Barron
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#15
11-11-2006, 08:32 AM
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Re: the bond report (what am i missing?)
[ QUOTE ]
[ QUOTE ] Nothing is true 100% of the time. A former bond guy, my guess is thus: Employment = more jobs revised upwards. This means FED is more likely to hike rates and less to cut. This means lower inflation, ceteris paribus. This means bond prices rise and yields fall. QED. [/ QUOTE ] ty but i dont think this is QED b/c you failed to mention the real time lag between FED raising rates and inflation falling. the falling yields are occuring now at t0 you have implied that at tx>0 the fed MAY hike rates to fight off inflation and at ty>x inflation will fall and bond yields will as well. Barron [/ QUOTE ] But doesn't the future rate cut affect current investors' expectations? Wouldn't they revise their desired yield lower knowing that a future rate cut is now more likely? Isn't it kind of like the stock of a company that announces some deal which will give them lots of increased revenues in a year, and their stock price immediately goes up?
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#16
11-13-2006, 06:32 PM
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Re: the bond report (what am i missing?)
[ QUOTE ]
[ QUOTE ] The upward revisions is relatively old news? I remember reading about it earlier in the week. The yields did go up the day the initial set of revisions came out but trended downward since. Bond market is thinking recession next year. Also profits have been relatively strong this year for corps. Since business investing has not gone up that much(maybe they are thinking recession too?), where does all that capital go? Bonds and Stocks. [/ QUOTE ] awesome. this is what i was hoping for. the expected recession means the fed will, in the future, be more likely to cut rates to reduce chances that growth slows too much or, as implied w/ the word "recession", go negative. Barron [/ QUOTE ] Bonds did not rally on an expected recession, that is ludicrous.
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#17
11-13-2006, 06:35 PM
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Re: the bond report (what am i missing?)
[ QUOTE ]
[ QUOTE ] Nothing is true 100% of the time. A former bond guy, my guess is thus: Employment = more jobs revised upwards. This means FED is more likely to hike rates and less to cut. This means lower inflation, ceteris paribus. This means bond prices rise and yields fall. QED. [/ QUOTE ] ty but i dont think this is QED b/c you failed to mention the real time lag between FED raising rates and inflation falling. the falling yields are occuring now at t0 [/ QUOTE ] Of course, all that gets priced in at Time = zero. Bond prices change based on today's expectation of inflation over the next 10-30 years, etc. Traders don't wait 5 years to see what inflation was. Just like when CAL/UAUA/AMR announce price hikes, or KO/Pep/BUD announce price hikes, the stocks move higher even though it may be multiple quarters-a year until the profits are pushed through [or 13 weeks.] Also, the headline is for non-traders. The 'real' answer is usually something different, and you have to be in the market to know what it is, who was buying and selling, where the stops were, that sort of thing. 95% of the FX market moves I heard 'explained' in the press over the years were full of BS and usually totally wrong.
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