Treasury Yields Are Not Grown With Fairy Dust

They are not grown with magic beans either.

Financial analysts say that it is expected that rates would rise from growth or inflation and we should not be surprised. 

But, interest rates don’t rise because of expectations or a feeling that it’s time for it; it’s not through some magical force that, if you believe it strongly enough, it will happen.

Why did bonds go lower and yields higher? Because people felt it was time? That’s not how this works. People (or institutions, or nations) have to actually sell. And if people sell, it’s because:

(i) there’s some place better to put money (because of growth or inflation, for example).

Or

(ii) investors believe that an outside force will push the value of their investment down. 

Since money has not gone out of bonds and into other asset classes, then bond sellers are not selling because of expectation of growth or inflation- or else other asset classes that thrive in these environments would have received the capital.

So, it’s crystal clear that there is some other reason. You can’t just stick with your one reason about something if the facts prove that it is simply untrue. That’s called “insanity”.

Stocks (including bank stocks), energy, metals, etc., did not go down just because yields went up. That is simply not how this works. Stocks, and energy, and commodities, and bank stocks, all went down because, along with selling of those assets by investors in those assets, bond sellers chose not to buy these things.

So- “no answer” is not an answer. “These things happen” is not an answer. Some “outside force” compelled bond owners to sell bonds. And that same force compelled them to not buy other assets. It’s very basic logic, really.

So what is it?

Financial professionals think that investors are reacting to the wage report … and they are right. Investors are reacting to the wage report … to the weakness of it! Investors saw a weak PCE number, and weak wage growth, all while the Fed is raising rates on all ends of the curve with hikes and quantitative tightening. Thus, there is no safety in stocks, bonds, commodities, etc., and this is why everything “everything” is lower. It is not inflation to which investors are reacting, or they would be buying inflation sensitive assets … stocks, gold, copper … which are ALL down. Investors are in fear of asset bubbles being popped because of limited pricing power for businesses and weak wages in the employment report, combined with an aggressive Fed on all ends of the curve.

And that’s why ALL assets have “deflated”. Investors fear “DE”-flation … and even recession.

As far as I recall, the last time both stocks and bonds bled such red, simultaneously, was following the 2007 and 2008 crashes. Stocks had crashed, and the Fed had to buy bonds to get them higher and get the yield down.

 

Neil S. Siskind, Esq., President
The Siskind Law Firm
Tel: 646.530.0006

Neil Siskind is the Founder & Chairman of The Fatherhood Assignment
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Learn more at:  http://www.neil-siskind-the-fatherhood-assignment.org/

Neil Siskind is the Conservator of the Neil S. Siskind Nature Preserve
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The Neil S. Siskind Nature Preserve is over 8 acres of environmentally-pristine waterfront land in a magnificent setting along New York’s majestic Hudson River. The Preserve includes a variety of species of animal and plant life, and is a precious example of the thoughtful maintenance of New York’s priceless open spaces. The land’s uses are limited to outdoor recreation such as hiking and climbing, and the study of ecology, nature and land use. The Neil S. Siskind Nature Preserve allows for the intelligent contemplation of our valuable natural resources and the most effective ways to maximize them and keep them protected.

Neil Siskind, Founder, “National Fatherhood Day” – March 29th

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To encourage recognition of the needs of boys and girls who are living without fathers or father-figures in their lives.

Read about the non-profits and charities whose missions Neil Siskind supports and promotes: www.neilsiskindsupports.com
Caring is Free®

You can read what clients and associates say about Neil Siskind at: http://siskindlawfirm.com/neil-siskind-bio/.

Neil Siskind’s Volunteer Work:

– Memorial Sloan Kettering Cancer Center, Volunteer

– Memorial Sloan Kettering Cancer Center, My Fundraiser- Help Neil Siskindhelp children with cancer to be more comfortable: http://mskcc.convio.net/site/TR?px=3182108&fr_id=2632&pg=personal

– Make-A Wish Foundation- Help Neil Siskind make sick children’s wishes come true by creating your own fundraiser: Neil-Siskind/Help-Make-A-Child-Smile.htm

– DonorsChoose.org- Donate to one of my needy public classrooms: http://www.donorschoose.org/NeilSiskindGiving

– Champion Children– We seek to inspire people through stories of children who have overcome challenges: http://siskindlawfirm.com/neil-siskind-champion-children/


Neil Siskind’s Pro Bono
 Work:

– Saving Senior Citizens- Protecting New York’s senior citizens from fraud and financial abuse www.savingseniorcitizens.com

– Senior FreeStart Business– Pro Bono: We seek to help put senior citizens in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– Veteran FreeStart Business– Pro Bono: We seek to help put Iraq and Afghanistan war veterans in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– In development: The Neil S. Siskind School of Hope: A free school to teach inner-city youths the skills of entrepreneurship and importance of economic self-sufficiency.

Neil Siskind’s Government Work:

– Suffolk County District Attorney’s Office, Boston, MA, 1994, Intern
– Office of Senator Christopher J. Dodd, Newington, CT, 1992, Intern
– Hartford County Department of Probation, Hartford, CT, 1991, Intern

Neil Siskind’s Community Assistance:

Financed & operated a legal clinic providing low-cost legal services to struggling Long Islanders during the recession to help clients resolve debt, organize finances, and launch new businesses.

Neil Siskind’s Professional Curriculum Vitae: http://neilsiskind.com/

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