What is Going on with the US Treasury Market?

In this video, we dive into the dynamics of U.S. Treasury bonds and their recent price movements. With TLT trading nearly 50% below its 2020 highs, we explore the macroeconomic and political factors driving this trend. Are Donald Trump's policies accelerating the decline, or is the market overreacting? We analyze historical trends, oil price correlations, the yield curve's signals, and the Federal Reserve's influence on long-term interest rates.

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[wodeo]

this is super educational, thank you so much for the deep dives! new sub here :)

[jaydubau]

Pretty simple. The demand for US debt is decreasing while supply is increasing. i.e. too much government deficit spending, not enough buyers willing to finance it at these rates. For yields to decrease, government needs to balance their budget which will reduce the risk of inflation. Alternatively, the Federal Reserve needs to initiate QE and start buying treasuries to absorb the supply.

[blessings]

He gave two examples 2020 and 2008 when TLT went up 26% and 50% respectively. He also used the word ‘crisis’. So TLT did well during Covid and banking crisis. If you are not expecting crisis after Trump takes over in 2025, treasuries are not the place to be in. People invest in Treasury bonds for safety reasons when there is crisis in the markets.

[cmonz]

The Fed can’t control interest rates. They just can set the rate.

[luke-mcdt]

Bond supply up = bond value down
Bond value down = interest rates up

[Helmut-pdh]

The TLT and Oil spread is a sign for stagflation: recession + inflation. But even with stagflation I think that the FED will lower rates, because high employment is more important than low inflation.

[Spectoral_on_SPOTIFY]

Didn't the fed just say they are not going to cut anymore and only predict about two rate cuts in all of 2025 and 2 rate cuts in all of 2026? That would mean A much slower Upward move For treasury bonds / yields.

[daveb]

Okay, but bonds don’t operate like stocks, they operate like options. The yields have a vertical spread. For instance, you can graph the bond yields vertically and separate them by rates, and the low rates are selling off, but the high rates are still being bought up. The graph is lopsided and they aren’t grouped together uniformly. The market is still buying new government bonds at the higher interest rates. The fact that old bonds are selling lower is effectively meaningless if the new bonds continue to sell. In the worst case scenario where demand for new bonds dries up, it would result in the prices dropping under face value. Meaning the government would be selling $1 bonds for below $1. In a doomsday scenario the new bonds would be selling for half the face value, meaning that the government would be taking on $2 in debt for every $1 they get from selling bonds. This may sound extreme, but it’s only equivalent to a 7% interest rate increase. Which is the rate which doubles payments over 20 years. This isn’t catastrophic, but would have devastating psychological effects on the market. Market sentiment would be in the basement if that were to ever occur.

[GrahamJoh]

What's the most effective strategy during this period of volatility with the rate cut? Most of my portfolio is in (20% Index funds, 20% CD's 30% Bonds/T-bills and other assets) I want to explore different strategies to benefit from a potential bubble.

[MarkusAReallyUs]

I don’t know but I think it’s possible that oil prices can be artificially, temporarily manipulated, which could be what is happening now.

[nk-inoe]

This was awesome explanation.. Can you please do a video on markets/economic conditions of developing countries when FII/FPIs start leaving from there. Something similar to the one which is happening with India now..

[SuperKanuuna]

LOL. Is this a copy channel of Bravos Research -channel?

[oppenheim]

A recession has likely already started. And, it might be anticipating stagflation - higher inflation and weaker economy.

[HoseKamacho-un]

No longer a reserve currency. No manufacturing to back your currency with goods.

[Sebastian-kbh]

I Hit $12, 590 k today. Thank you for all the knowledge and nuggets you had thrown my way over the last week .i started with 3k in last week now i just hit $12, 590

[TuckermanLane]

If bond prices need economic slow down to rise, why was TLT rising nicely (often dramatically) during the post-great recession equities bull market?

[Aussie_Anarchist]

Does anyone know what software they use to create these interactive charts?

[JoeHolloway-bu]

If only our great president didint have the world lose faith in our bonds due to how destabilizing the dude is.

[hassan_a]

What about making a video about US500 index?

[heidikamrath]

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