leftys journal

Bonds can be used as collateral, so if you buy high here (5% yield) and it goes up to 6% yield, your collateral gets crushed and nobody wants to buy it from you bc the govt is giving out better yield themselves

If you buy high here at 5% and 10y bonds go down to 4% or to 3%, your guaranteed 5% per year return is worth a lot to a secondhand buyer

But it begs the question why are people not falling over themselves to get this guaranteed yield and it basically boils down to the govt has a lot of issues going on and bond yield high = low confidence stuff gets better soon

I think I get couple examples wrong/numbers flipped and gpt called me retarded for not properly explaining QE in the transcript and inserting my opinion but it’s an overview if you’re interested in what’s going on w bonds/bessent/warsh rn

Been going autism mode researching bond market

5%/year with basically infinite size is good ass money

So that’s the other part as to why it’s such a bad thing that people aren’t really bidding them

Oh my bad fundamental part that I didn’t explain properly: the yield pays out per year. So you’re getting roughly 5% per year to buy the 10y bonds right now

So while yields are high it’s basically yes it’s guaranteed 5% but there is a lot of risk elsewhere that doesn’t actually make it that attractive if you have low confidence that the government can figure their issues out and bring yield down

If you have guaranteed 5% return on your money why aren’t you gobbling it up immediately? And the answer is because you have low confidence that it will outpace inflation

When 10y bond yield is low say 1-2% you’re probably going to put that into the s&p500 because that’s a better place to park a large chunk of money for a better return over time even though that 1-2% is guaranteed. And then you also get risk of “if it goes from 2% to 3% my collateral that was once $100m is now crushed by x%” (I don’t think it moved exactly correlated with the bond’s % yield return it’s a different scale if im not mistaken) so it’s a worse investment

Unless it gets capped (possible outcome) or Bessent 10y bond buybacks turn back on and alleviate fears (possible outcome) then they may continue to rise

The absolute most base tldr: market participants know what bessent and Warsh are trying to do and they aren’t very confident that it will work so there isn’t much incentive to 3,3 and play along so 10y bond yield has been steadily rising

Important to remember we’re fucking around with large sums of money to the normal person on a day to day basis

Regular people don’t have more than $10k in savings

Average is skewed upwards by rich people

https://x.com/lopp/status/2110717239620256167 just dox bro theres infinite upside to doxxing except people will find ten year old videos of you zesty dancing to latin pop for some reason and maybe a group of guys getting $2k/month from the military will show up at your door with guns and risk life in prison to slime you out

Or both

Did market participants get more retarded or am I stuck in midcurve hell

Yeah bro. Quantum proof blockchain is posting about how many x’s it’ll take to flip zcash