Author Topic: 10 Year Bond Yields  (Read 7344 times)

rb

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Re: 10 Year Bond Yields
« Reply #40 on: February 02, 2018, 02:20:19 PM »
Output for commoditiy products is determined by the demand curve though. Well, mostly (aside from non-market incentives i.e. gov't subsidies).

My question is what happens when those ex-farmers are not able to be re-allocated. What happens when we become so productive? Why would capital costs remain high?
Output is determined by demand in the short run. In the long run output is determined by supply.


LC

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Re: 10 Year Bond Yields
« Reply #41 on: February 02, 2018, 02:28:52 PM »
We can argue about that (Keynes would disagree) but my question remains. What happens if  we become so productive at 'current' activities, and there are no breakthrough technologies to demand additional resources and force re-allocation? I.e. a situation of long-term idle resources/capital. Why would capital costs remain high?
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rb

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Re: 10 Year Bond Yields
« Reply #42 on: February 02, 2018, 02:45:24 PM »
We can argue about that (Keynes would disagree) but my question remains. What happens if  we become so productive at 'current' activities, and there are no breakthrough technologies to demand additional resources and force re-allocation? I.e. a situation of long-term idle resources/capital. Why would capital costs remain high?
Ok first off, the fact that long term output is driven by supply is consistent with Keynes and IS-LM. I also said in a previous post that if you get an bump in productivity would lead to lower rates and higher output.

In your mythical example when people stop wanting to consume and stop working. That would translate into a decrease in long run supply and lead to higher rates. But if we spend time talking about mythical scenarios we should start debating what will happen to the 10 year treasury yield once unicorns start working in auto manufacturing and elves take over investment banking.

LC

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Re: 10 Year Bond Yields
« Reply #43 on: February 02, 2018, 03:02:09 PM »
Keynes was the guy turning supply side economics on its head, saying it was increased demand which spurs supply increases. When cars were invented, why didn't the horse-and-buggy industry just ramp up supply to increase demand? Regardless, supply vs. demand driven economies is a different discussion...which economists far smarter than us still argue over.

I'm not talking about a slowdown in consumption or "wanting" to work. I'm saying, what happens to all the truckers/drivers when we build self-driving cars. Historically they work elsewhere. Because historically there have always been other opportunities for human labor. My question is what if those opportunities slowly dry up? Furthermore, is there evidence that those opportunities are drying up? I can see the argument for 'yes' to the latter question.
« Last Edit: February 02, 2018, 03:07:10 PM by LC »
"Lethargy bordering on sloth remains the cornerstone of our investment style."
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Viking

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Re: 10 Year Bond Yields
« Reply #44 on: February 13, 2018, 04:24:57 PM »
CNBC had an 8 minute interview with Nancy Davis of Quadratic.

At about the 4:30 minute mark she discussed how QE and rising bond yields are disrupting the volatility trade.

My key takeaway is the impacts are not over and they are going to be significant and nobody understands how it will play out. Very interesting discussion (most of the other panelists simply said nothing as it was clear the discussion was over their head).

https://www.cnbc.com/video/2018/02/13/chief-investment-officer-breaks-down-how-to-trade-volatility.html

John Hjorth

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Re: 10 Year Bond Yields
« Reply #45 on: March 06, 2018, 03:13:42 AM »
Lecture by Lars Christensen: Low bond yields are here to stay.

Lars Christensen is a Danish macro economist. He is a fundamental monetarist, in the camp of Milton Friedman - his favorite economist. I've started following him for a while.
The video is of questionable quality. Please have patience, if you start listening to it. It gets better.

Like other fellow board members in this topic, I'm also struggling with this .[too!]

I haven't heard the whole lecture yet. [This is really dense matter to me.] I thought I would just share here.
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John Hjorth

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Re: 10 Year Bond Yields
« Reply #46 on: March 21, 2018, 11:15:38 AM »
Federal Reserve FOMC Meeting Transcript is out.

The press conference will take place today at 2:30 PM ET.
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

John Hjorth

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Re: 10 Year Bond Yields
« Reply #47 on: March 21, 2018, 12:41:42 PM »
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

EdWatchesBoxing

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Re: 10 Year Bond Yields
« Reply #48 on: March 21, 2018, 02:26:05 PM »
CNBC had an 8 minute interview with Nancy Davis of Quadratic.

At about the 4:30 minute mark she discussed how QE and rising bond yields are disrupting the volatility trade.

My key takeaway is the impacts are not over and they are going to be significant and nobody understands how it will play out. Very interesting discussion (most of the other panelists simply said nothing as it was clear the discussion was over their head).

https://www.cnbc.com/video/2018/02/13/chief-investment-officer-breaks-down-how-to-trade-volatility.html

I missed this when it was first posted. Nancy Davis seems to really know her stuff. Interesting to hear that she only uses options to implement her ideas. She mentioned that she is long gamma in the short end. I think this makes a lot of sense. She also mentioned market makers and delta hedging.

Is anyone familiar with option market makers? Focusing on SPX, I am guessing that institutions typically write puts and covered calls, making them short vol and short gamma. Are market makers generally long the straddle then (and use futures to delta hedge)? Is this the correct thinking? And if the market maker is short gamma, I am guessing they would want to bring it down to zero ASAP.
« Last Edit: March 21, 2018, 02:28:08 PM by EdWatchesBoxing »