Hi William, that happened already: kzfaq.info/get/bejne/ht2UndB9mrvZY30.html

@ Unal Durmaz since inflation is a most effective measure to get rid of debt (and the well-being of lower income people at the same time) neither the government nor really rich people, which own inflation proof assets will agree with you and will let inflation run on an at least 5 % level for the coming decade or longer, since at that level it can be somewhat concealed by manipulating the indices. It’s that simple .. and profitable for some

@@dankurth4232 absolutely nobody benefits from inflation. Think of it like zombie apocalypse for instance, using this analogy zombie virus is the inflation. Hard or soft landing as people say it, I am ok with whichever as long as inflation is comfortably under 2 like the last 30 years because believe me there are many examples around the world where people have no choice but to leave. Hope this makes sense.

No kidding. My bond portfolio got smoked last year.

Not sure if this is a rehetorical question or not, you seem to have the concept.. so excuse if it is. Duration is the time to maturity, but the longer the duration of the bond the larger the influence on the change in price of the bond to changes in interest rates. The price of the bond when interest is compounded annually is determined by Current Price of bond = Maturity Value / ( 1 + r) ^n,.. where maturity values is the face values or what's paid at the end of the duration or term, r is interest rate and n is the term. (Note, this is for zero coupon bonds. That is rather than paying a percent of full value periodically, they pay no interest and just discount the principal. Bonds with a combination of coupons and discounts would have a modified equation.) Example,... Let's say a $1000 30 year zero coupon bond is paying 5% at time of purchase. What should the purchase price be,.. POB = $1000 / (1 + 0.05)^30 = $231.40 Now let's say immediately after the bond is purchased, the Fed raises short term rates causing the 30 year rate to go to 6%. The POB would then be $1000 / (1 + 0.06)^30 = $174.10 Causing a loss to the owner of about 25% in principal. Now if the person is going to hold the bond to maturity for 30 years it doesn't matter. It's like a stock price decline of 25% to a long term stock holder.. On the other hand if the Fed lowers rates causing the 30 years to go to 4% The POB would then be $1000 / (1 + 0.04)^30 = $308.30 Giving a gain to the owner of about 33% in principal. Again if the person is going to hold the bond to maturity for 30 years, it doesn't matter. He's still going to get the same face value. This why timing of buying of longer duration bonds is critical. If the Fed is going to be raising for a while,... you don't want to buy the longer duration bonds, bcause you'll lose principal in the short term. So as the Fed is raising they buy more the shorter term,.. which is better than holding cash. Then when it's clear the Fed is through raising and rates are at their peak,.. that's the time to jump into the longer term bonds,.. because you'll not only benefit from the higher interest rates, but an appreciation in principal if you sell the bonds as the Fed lowers rates. You can do the above with other durations obviously. The problem is no one knows exactly how high the Fed will go with rates. If there's fear they have to keep raising to 6 or 7 or higher,... few bond trafers will buy the 30 year or 20 or even 10,.. although the rates of change of prices of the bonds on a chnage in rate by the Fed declines with duration. A play, if you trade bonds, could be to start slowly moving out on duration as you think the Fed is nearing the top of hikes. Because you know insiders and institutions will be the first to know and act and by the time the retail realizes it and can reeact.. long term rates could drop pretty significantly.

@@jcgoogle1808 hi….thanks for your very good reply. I think that for bond people, duration is used very differently than the way that stock ppl and macro ppl refer to it. The “duration” used in a bond world is not necessarily a “time to maturity” situation. You clearly know a lot about bonds. The official way that bond ppl use duration is a number that represents a measure of risk for bonds. The macro ppl use it incorrectly, and often, to discuss that cash flows are way out in the future. So every time I hear them say the “duration of equities” I immediately think it’s a person using a buzz word without knowing the meaning of it from a fixed income perspective. Because I don’t think most ppl using duration are talking about “how much will the stock price move for a 1% rise in rates.” Most macro ppl use it to refer to cash flows way out in the future. Thanks for reply… :)

Not everyone thinks the Fed is the Boogeyman.

if Canada likes immigrants so much we'd be glad to send about 5 million illegals that senile ole joe has let wander across our open (thnaks to him) open drug cartel run southern border. I hear tropical climate peeps make good bobsled racers.

@@jcgoogle1808 Justin Castro does not represent Canada