Who are the idiots buying bonds for 1% interest?

It is not the yield, it is the capital gains. A 1% decrease in a bond, can lead to 10% capital gains (gains rise with duration). They are trading cash flows, which are additive over time.

 

You understand something, but your last sentence can be misleading or reflects a lack of full understanding. The gain is still coming from the yield, because it results from a CHANGE in the yield. Where did you go to school?

 

Yes, they can be true, because in a deflation people save more than they borrow. To resist the fall in GDP, the banking system needs a borrower of last resort, and the US is a borrower of last resort. The US will become more credit-worthy not because of budget/etc but because it is needed by the system.

 

2 points. It isn't the yeild that is being sought; the spread simply gives the trade the freedom to work.
The money does not need to come from the us fed. Given the options currently available, I would not look for a short in the market anytime soon; rather, I think a buyer of dips will work here. I believe your counter argument that raising rates is impossible at this juncture is correct. Welcome to the lost decade. Should be a blast, if played correctly.

 

I think your first sentence is correct, but in your second sentence your thinking seems to be mixed up. Read my previous post.

 

What are you talking about? The money does not comes from the Fed. It comes from the US Government (Treasury), which is ultimately the tax payers. The Fed does not pay interest, it receives interest.

 

I don't fully grasp your argument. But it's beer:30 and my birthday, so I'll have to ponder it tomorrow.

 

Yeah, thx for catching that. It has been a long week of trading the us plus the asian markets and I am a little tired, so try not to get your panties too bunched. I think you could catch my meaning, couldn't you? Or do you just need to show the world how smart you are. I am surely impressed!

 

Happy birthday, have fun, and remember that age is just a number!

 

Pls. do not take it negatively, because it was not meant that way. I do not trade asian markets, so I would be interested to learn what you trade/when/etc. Cheers!