thanks. good write-up. New monthly subscriber here. Appreciate the clear writing and language. Re: bonds, how much lower can the 10-year go? Would the US let the 10-year go negative? I doubt it. Will tapering of QE lead to higher rates? Also, do you have any other crypto holdings besides BTC?
Hey Axel, appreciate your comment! Thanks for the kind words. When I look at the 10-year Treasury Index (TNX) it's currently trading at 12.9. I posted some technical analysis on Twitter where I make the case that it could fall below 9.5. That would be a substantial decline, but one that could certainly happen if the taper process gets delayed beyond current market expectations (end of Q4 2021 or early Q1 2022). Based on that analysis, I think we'll see a 10-year yield below 1%, but likely not lower than 0.9% barring an extreme change in economic conditions, inflation expectations, or monetary policy.
The likelihood that the US experiences negative nominal yields on the 10-year anytime soon is very small in my opinion. Over the next 20 years, I'd say it's at least a 33% chance though. If more & more developed economies have negative yields, the U.S. yields could reasonably dip slightly below zero & still have substantial levels of demand relative to global bonds.
Yes, tapering will result in higher bond yields (all else being equal). With that said, the rate of the increase will be entirely dependent on the aggressiveness of the tapering schedule.
Please check out the "My Portfolio" report that I published on Saturday evening for an updated view of my portfolio's top 10 holdings & crypto allocation.
thanks. good write-up. New monthly subscriber here. Appreciate the clear writing and language. Re: bonds, how much lower can the 10-year go? Would the US let the 10-year go negative? I doubt it. Will tapering of QE lead to higher rates? Also, do you have any other crypto holdings besides BTC?
Hey Axel, appreciate your comment! Thanks for the kind words. When I look at the 10-year Treasury Index (TNX) it's currently trading at 12.9. I posted some technical analysis on Twitter where I make the case that it could fall below 9.5. That would be a substantial decline, but one that could certainly happen if the taper process gets delayed beyond current market expectations (end of Q4 2021 or early Q1 2022). Based on that analysis, I think we'll see a 10-year yield below 1%, but likely not lower than 0.9% barring an extreme change in economic conditions, inflation expectations, or monetary policy.
The likelihood that the US experiences negative nominal yields on the 10-year anytime soon is very small in my opinion. Over the next 20 years, I'd say it's at least a 33% chance though. If more & more developed economies have negative yields, the U.S. yields could reasonably dip slightly below zero & still have substantial levels of demand relative to global bonds.
Yes, tapering will result in higher bond yields (all else being equal). With that said, the rate of the increase will be entirely dependent on the aggressiveness of the tapering schedule.
Please check out the "My Portfolio" report that I published on Saturday evening for an updated view of my portfolio's top 10 holdings & crypto allocation.
Cheers!