UST

oilcantommy

What is the? I am a dumbass. Is it that obvious? I dont understand UST?

Timely-Group5649

UST. He's not interested in Earthers.

Neat-Concentrate-239

Bro, let me give you the actual technical analysis on this that BI are not going to give you. In 2016 Netflix gave The Shannara Chronicles, an adaptation of Terry Brooks' The Sword of Shannara. It featured Poppy Drayton and the smoking hot Ivana Baquero (Ivana baquero too if you know what I'm saying). Anyway, it had threesome-UST with the main character (A wasteman, dw about him) which eventually escalated to a FOURSOME-UST with Asian hottie Malese Jow in season 2. And what happened with all this UST with all these hotties? CANCELLED. Nah, NFLX can go to $0 for all I care.

teh_herper

The Terra-LUNA collapse in May 2022 was an unprecedented cryptocurrency crash where a once-booming $45 billion ecosystem wiped out investor wealth almost overnight. The wipeout erased over $60 billion from the broader market and triggered the bankruptcies of major crypto lending and investment firms. The catastrophic failure was triggered when TerraUSD (UST), an algorithmic stablecoin designed to maintain a permanent $1:1 peg, lost its parity with the US dollar. Because UST was not backed by physical reserves, a sudden surge in mass withdrawals overwhelmed the system. To artificially defend the peg, the protocol algorithmically minted trillions of the sister token, LUNA. This hyperinflationary "death spiral" caused LUNA's price to plummet from over $119 to virtually zero within a matter of days. a la gemini

BudLightLymeDisease

If China starts selling off UST everyone's going to have very calm, logical reactions

MoneyMonsterStudios

Comparing the liquidity of *any* emerging asset to the US Treasury market, the literal bedrock of global fiat liquidity,is the real galaxy-brained move here. No one is saying BTC is deeper than the $25T UST market. The point is that for an institution needing to move $50M to $100M into a non-sovereign asset at 2 AM on a Sunday, Bitcoin offers instant, programmatic liquidity with minimal slippage compared to almost anything else outside of major forex pairs and mega-cap equities. You don't need to be on crack to understand the difference between asset size and transactional velocity. But if your "friend" still wants some, tell him it's called SHA-256.

robotlasagna

>Bitcoin is probably one of the most liquid assets available to large investors. Dumb. The UST secondary market alone has an average daily volume of $1T. Bitcoin total market cap is $1.27T If you think bitcoin is a liquid asset you're on crack and also can I get some? (for a friend)

Anymous2314

I am not going to risk 50% loss for earning 5.1%. This is why 30 year UST is kind of horrible idea with Fed being filled with loose monetary policy folks. Fed Chairman can be easily looking to make inflation go to 6-7% next few years while they keep rates lower than 5% using Fed's balance sheet(QE).

Anymous2314

Only problem I have with this analysis is: Things changed after 2009, austerity is no longer accepted. Also after covid, central banks will use infinite money creation to stop deflation, which is very good for stock. After 2022, stagflation has been an issue since supply of money and velocity seems to be unbounded. Liquidity can do whatever it wants with stock valuation. Monetizing debt is a big problem for bonds, hence most people do not want to invest in 30 year UST anymore. That said, nobody knows the future but I am seeing stagflation in near future not deflation, so both bonds and stock may get killed or may be stocks will outperform bonds due to people not caring about valuation at all.

zxc123zxc123

Imagine making your investment decisions based off of the ramblings of a 3yr old who's shitting themselves and a group of 9yr old terrorist-fighters all claiming they are the leader. Market already did the thinking for you: 1. Dipped but gone back up + broke to new highs = market thinks current war w/o escalation priced in (💎✋. Don't 🌈🐻) 2. Higher oil + energy sector/stocks = market thinks war likely it's going to drag on (✋🛢 if you have some) 3. Inflation hotter = Long bond yields up + bonds down = market thinks Fed rate might hike but not that much so market doesn't have to dump (Disregard Long UST. Build ST bills/cash for defense like Buffet/Trump/Dalio/Bezos/Zuck/Dell. 💎✋ stocks against inflation) It's really not that hard.

bluejeff1976

I think future historians will mark the time period when people bought stocks regardless of valuation, ceasing the benefit of capitalism where scares resources were efficiently allocated in public markets. See the book 1929 by Andrew Ross Sorkin. Price discovery is gone already. Stocks are a currency and inflation play now. There may not, however, be real returns in the stock market for a decade, BUT if you don’t hold these assets and get a nominal return you’ll be a victim of the OBVIOUS financial repression policy. This wasn’t started by COVID—it started in 2008. You lost money in Treasuries on a real basis since then. It’s theft by the policy makers on the American people and foreigners who buy UST. The OP is right, though—it’s the only way out. Poor people are going to get smoked.

Salty-Bid1597

Stampede to float before UST yields hit 6% and we get The Big One. Anthropic next week probably.

iShitBloodandCumShit

UST 4.25% looks like it could HS. Currently sitting on the right shoulder.

ImaginaryHospital306

It’s all about liquidity. Geopolitical events have caused a massive redirection of capital from trade financing to equities. Where is capital going to go right now? Not Europe, definitely not the GCC, not Asia. UST yielding 5% but nobody wants it (yet) and sovereigns are selling them to buy oil. It will not end well but nobody knows when exactly.

Brawmethius

The entire system is plumbed to print money and go up. Unless you see a mechanism for this to collapse (which I struggle to, because the FED literally poofs infinite liquidity into existence). So the only credible collapse I see is bond market throwing a fit because they stop trusting USD, or the USG actually defaulting on payments. Otherwise the FED and UST have free reign to issue debt and poof USD into existance as long as the global markets at large accept that.

notextremelyhelpful

Yes, they're both referring to the same type of strategy. 1. Large majority of capital goes into risk-free liquid assets that have small relative haircuts to the marginable collateral (e.g., short-term UST since the yields are already most of the way towards your return target) 2. Juice the remainder of the return target via high probability-of-profit trades with large tail risk (when the trade goes wrong, it goes VERY WRONG). Selling far OTM puts (i.e., picking up pennies in front of the steamroller) is a very well-studied approach. I'm sure you can find any number of resources/backtests confirming the P&L curves. The real question becomes: Have you ever come across any reputable resource or backtest that a 0.5% return per month is even REASONABLY possible? Empirically, the evidence points to "no". With extremely few exceptions, every strategy that boasts a high probability of winning on any given individual trade is inextricably linked with enormous tail risk. That's what you're actually getting paid for - taking on the tail risk. If there were a nearly risk-free way to achieve those consistent monthly returns WITHOUT the tail risk, it would almost instantly be priced out of the market, because everyone would do it. One of the pillars of options trading is understanding the risk dimension you're accepting for the return dimension. No free lunch and all that jazz.

richbeezy

Tis all about the 10 yr UST and the 4.5% level. We go over that and we going down. Otherwise.......UP.

CarRamRob

And why did the UST10y go gangbusters? Inflation caused by a commodity crunch. Why during this commodity crunch wouldn’t it do similar? In fact the bond markets are suggesting things aren’t quite that resolved. They at least look like there is still a lot of concern about the economy even if the equities market doesn’t.

Pearl_is_gone

What tanked the market was UST10y going from 1% to 5% alongside broad inflation, not rerouting Russian oil lol

Pyromelter

Good options there, I think part of my hangup is that there are SO MANY choices and options, my head starts spinning and I can't really figure out which way to go. If we had a fed bank that would actually keep rates at reasonable levels (thinking like 4.5-7%) for the long term, a UST bond ladder would make sense for very steady money, basically just making my own CD's. Current 10 year at 4.3% just feelsbadman, and you just know they will go lower in future years.

No_Feeling920

They can probably keep the lights on by restarting yield curve control, but crude going up in USD and JPY going down in USD will make energy costs prohibitive (inhibitive) at some point (as well as many other imported basic materials). Or they can try selling off their UST/USD reserves (and buy back JPY) to boost JPYUSD, but that can't be done forever and Trump/Bessent won't like it at all, as they also want lower market yields on USTs.

Brawmethius

The only mystery is why the bond holders tolerate being robbed... Oh wait that isn't a mystery either, forced collateral holders to access the liquidty and buyback from primary dealers. If you want access to the American financial system you are forced to buy into the casino. In American policy: UST selling directely to FED is big bad and proves no idepedence of central bank. UST selling to prime dealer to be bought back on open market by FED, is however excellent independence by the central bank.

ValarOrome

lmao hell no, oil reserves are being depleted across Asia, and it's just a matter of time before Iran starts targeting energy infra in the gulf. Oil will go up for sure, and most likely Japan will have to start dumping equities and UST to be able to afford oil. Iran might be taking a financial blow but to them martyrdom is the good ending, financial collapse is absolutely nothing to them, plus they have other routes to get their oil out.

Finger_Think

Is the UST selling oil futes?

Money_Do_2

I mean, global conflagration in exchange for oil price increase is really, really stupid so its possible. Also the UST is considering trading oil futures now. If you thought it was volatile before... an open hand to play against is on the table.

Extension-Ad917

UST yields headed back to where they were before the ceasefire

johndsmits

*"I'm surprised the market isn't down further..."* that was the sign folks, put'in time (and oil being shorted bu UST/🥭 buddies--yup).

Such_Stand_2360

I lost £50k in Luna and UST and then lost 20 Eth in Celsius wallet in 12 months ... your tried you need to learn from mistakes and grow

LarryStink

Carry trade is over the liquidation event already happened. JGB/UST spread juice isnt worth the squeeze anymore. 

ecoburner87

USO can crash any day now or never reach its previous high as UST sells into strength, SPY will crash slowly and then all at once within the next few weeks (less risk)

schoenwetterhorst

Liqudity in UST is abysmall right now. I'm surprised we don't see stronger yield fluctuations

TI-99A

Checks dive in 10 year UST price.  Treasury market forcing his hand.

weekendworker99

After the UST yields have peaked!

No_Feeling920

Gold is multiple things mixed together. If it was only the inflation/dilution aspect, I would not be so bullish on it. What convinced me is that US/USD is losing its trustworthiness (wonder why, LOL), prompting countries like China, India and others to pivot from holding USD/UST to holding (buying) physical gold. Also banks started recommending 60/20/20 (stocks, bonds, PMs) portfolios instead of the 60/40, so once the western retail starts piling in, there will be some more upwards pressure.

Sean_VasDeferens

I'm going to try to help. After 25 years, and now gliding into retirement so needing to be conservative I finally have enough cash, mainly from not the markets, to be uber conservative. I now employ a slow and steady highly diversified multi-income approach with a goal of 15-25% annual returns. I wheel only non-tech blue chip stocks. Each target has an annualized ROI of 10%, closing early increases the return and is viewed as a gift from the Wall Street gods. The wheeling is backed by cash sitting in laddered 90 day UST's returning 3.6%. So right there I'm getting 13.6%! 30% of my funds are in JEPQ ad PEO using DRIP. That's giving me 10% compounding. Then for daily fun I have short term SPX Iron Condor strategies that are very conservative and work for me. I only swing at the easy pitches here. This is what I view as fun money and when added to the above it gets me to an annual return after taxes that gives me a consistent net after tax return of 15-20% each year. For me an annual return of 18.3% is 15% after taxes. Take $100K with 15% after tax return, that will double every five years and grow to $1m after 16.5 years. Now add to that other income generators like buying and fixing up real estate on the weekends and having a good 9-5 job with an employer match on the 401(k) and you to can retire in your early fifties. Added to the above is that I was raised to live like a peasant. This Sunday I'll be replacing the brakes on my truck for $175, it should take two hours. A garage would want $900 for the same work. Take this one act of peasantry and multiply it over the course of every day of your life and you'll save easily $1mil of your after tax dollars, and you know that when shit gets done it gets done correctly and not by some high school drop out.

DeltaP2SavetheE

How long can the UST stay short oil? This is insane. We are really hellbent on destroying ourselves aren’t we

johndsmits

Biznews just speculated Treasury/Bessett could be shorting oil and why prices holding at 90-100, mind the markets going positive. I would not be surprised UST doing offensive moves like that, afterall it's a econ war too. Problem is that the biznews wonk said "what happens if UST is given a margin call" (yikes).

Technical_Scallion_2

None of us have a crystal ball and you may be right. My opinion is that the US Empire is in decline due to multiple factors and is like the Titanic just after it hit the iceberg. Countries are gradually weaning themselves off UST and USD and moving to other markets - I don’t see this cycle reversing, I see it gradually accelerating downwards. But we’ll see

alt-co

Furthermore, FTX was an early investor in Anthropic, which partly got sold to Jane Street (largest buyer) post Terraform Labs - UST Luna collapse. This is a serious conflict of interest because Jane Street is currently being sued by Terraform Labs for allegedly manipulating UST's crash.

InvestigatorPlus3229

wow some wild swings on the 10 UST

ecoburner87

It wasn't. Fed or UST we're buying equities imo

HesFromBarrancas

It’s an inflationary event, so you have to bear that in mind re UST. RE USD, a number of factors; again, inflation trade. Technicals were overextended. Fed uncertainty resolved. Still heart of world trade.

Dry_Tomorrow3632

back then when it was hyped i also didnt think it was possible for UST to fall that hard lol (i just got into crypto around 2021 so little knowledge at that time), but was proven wrong when the depeg happened,

Puzzled-Service5889

A serious suggestion of a withholding tax on the interest paid to non-US UST holders is a signpost along the slow-at-first-then-all-of-a-sudden collapse journey

Canamerican726

Also - the plumbing of the global financial industry is heavily reliant on treasuries/dollar ('exorbitant privilege'). High inflation devaluing dollar, higher US gov't borrowing costs are problems, but there's a ton of inertia in USD for a lot of reasons outside of treasury yield. Even given a doomsday scenario for the dollar, it's not as simple as buying EUR instead of USD. No other country has the depth, breadth and complexity of US capital markets. It would probably take at least a decade of regulatory work, capital investment, internal process changes and major software overhauls in every financial institution for another country to offer an alternative. And (I work in the industry) - no one is seriously making a bid to displace USD/UST. As to which side of the scale weighs heavier - well, we'll see. But it's not just a question of relative yields.

AllCapNoBrake

Eventually it will have to fully unravel. The only fail safe is the UST printing the shit out of the USD to buy the JPY.

robotlasagna

Chinas (or any other countries) ownership of US Treasuries or lack thereof has nothing to do with the dollar being the reserve currency. Countries seek to own UST because they need to put their money somewhere where they can get a return that is very low risk. UST is that investment. When countries invest in UST they are giving the US those dollars in return for more dollars later. Countries using the dollar as a reserve currency means countries hold large amounts of USD in their central banks and use that liquidity to facilitate transactions. They do this for a number of reasons but typically because its way easier to transact in a currency that is stable. China decoupling from UST will cause pain for the US by raising yields but they are not showing any indication of not using USD in their central banks.

ndwillia

That’s what the average person sees it as, for sure (inflation hedge, yada yada yada). Metals are a hedge to USD, but what happens when the hedge is no longer needed by the central bank that levered up on the metals in the first place to protect their portfolios based in USD? They sell their US equities and/or UST and bring that money back to their domestic markets because they’ve extracted the maximum they can from US-based portfolios. USD going down due to foreign yields rising has no affect on the metals used as a hedge in the traditional sense. What’s going on right now with foreign vs. domestic markets hasn’t happened in years, so it’s really easy to assume that the use case for precious metals is still the same now as it had been up until recently.

ndwillia

That’s what the average person sees it as, for sure (inflation hedge, yada yada yada). Metals are a hedge to USD, but what happens when the hedge is no longer needed by the central bank that levered up on the metals in the first place to protect their portfolios based in USD? They sell their US equities and/or UST and bring that money back to their domestic markets because they’ve extracted the maximum they can from US-based portfolios. USD going down due to foreign yields rising has no affect on the metals used as a hedge in the traditional sense. What’s going on right now with foreign vs. domestic markets hasn’t happened in years, so it’s really easy to assume that the use case for precious metals is still the same now as it had been up until recently.

ecoburner87

USDJPY refuses to go down, UST's got the algo set to UP ONLY - what a shitshow [https://www.tradingview.com/chart/PdHKArhV/?symbol=OANDA%3AXAUUSD](https://www.tradingview.com/chart/PdHKArhV/?symbol=OANDA%3AXAUUSD)

ecoburner87

it's a bunch of converging things at once, like Davos/Venezuela/Greenland/Iran/Fed chair. just 1 of these events would create wacky dynamics in our markets for a couple weeks, but they're all happening the same damn month. and while that's all happening, China is unloading US Treasuries (weakens USD) as a troll move while UST tries to coordinate with Japan

ecoburner87

it's really complicated but here goes: less than a month ago, Japan announced a snap election (to take place this upcoming Sunday), for voters to approve 1) tax cuts and 2) money printing/big spending. bond traders saw this as an inflation signal (for the yen), real interest rates spiked up super quickly. our entire system of leverage is tied into Japan's 0/LOW interest rates ("yen carry trade"), many players were caught off-guard by the quickness of Japan rates going up, potentially ruining the whole mechanism American hedge funds use for leverage. this coincided with🥭causing a mess at Davos and Europeans starting to sell US Treasuries, which weakens the USD. Bessent said he was communicating with the Bank of Japan to coordinate a response. Bank of Japan needs ammo (money) to pay for these tax cuts and programs and also buy up their own bonds to stop real interest rates from spiking, which will definitely start next week after Sunday's election. their central bank has plenty of money to do so, it's in their large AI/tech positions in the S&P and US debt that they're selling back to us. they are THE single largest holder of US debt. meanwhile,🥭said very clearly that he wants the dollar to weaken, it's part of his policy. this last few days, the USD has strengthened extremely quickly since the dip a couple weeks back. i think UST is helping prop the USD value to give BoJ as many yen as possible to defend their currency. as you can see, that's causing chaos in American markets and metals. when this exchange is done, it's possible the USD nosedives again? who knows? this is unprecedented and involves trillions of dollars.

k3t4mine

If he gets his way with the balance sheet, that means a lot of UST supply will come into the market. That will drive yields up, effectively acting as a rate hike. The Fed can cut the overnight rate all they want, if the middle and long end of the curve are elevated, that means borrowing costs are elevated as well, and means a bigger discount rate needs to applied to future cash flows.

ForumFan32

I mean Gold run up was on fear of a crazy person being put in as Fed chair. Instead we got a former govener and the fear about holding UST stopped.

ThinkingOfTheOldDays

I was going to write yesterday that Buffett's major blemish the last couple decades was simply ignoring the USD, UST and gold's changing role internationally after Ukraine. Another L for me. 

Cyb3rBall00n

Would give two additional points of clarification regarding the interplay between asset classes: 1. Bonds / Dollars - Multiple drivers appear to be reducing UST holdings across the globe - CN & JP are the obvious ones, but we've also seen pensions reducing their UST holdings as well. Central Banks aren't going to wholesale liquidate their positions, but they might not roll the paper as it hits maturity. They take the principal in USD but then immediately trade out of it. This puts downward pressure on USD. Would also point out that foreign bond / currency holdings are a function of trade with that country. To the extent that the US is reducing international trade with foreign countries, the foreign demand for USD/UST also goes down. 2. Stocks / Dollars - While the generalization that individuals won't take an equity allocation and move it to a currency allocation makes sense, at the institutional (including SWFs) level, strategic re-allocations out of US Equities into other assets (non-USD denominated) will occur for both tactical and strategic reasons. Just as you point out, the return of the US equity market relative to AU or EUR has not been great and if the expectation is that the DXY will decline another 10% (made up a number) in the next 12 months, they might seek to control that exposure by either selling the stocks or hedging the USD risk. The other thesis is more broadly called "Sell the US". Why be long Equity/USD/UST when Trump is undermining the independence of the Fed, M2 continues to expand - [https://fred.stlouisfed.org/series/M2SL](https://fred.stlouisfed.org/series/M2SL) and there's social unrest? I don't see that this set of policies will attract capital support from overseas, even from our traditional allies. The volatility here is way too high to justify sitting in the assets.

type_error

I am curious why it isn't factored in here... Its big news in Japan but mostly radio silence here. Given that Japan has the fourth largest GDP and hold a ton of UST bonds.

pink_ego_box

You don't have any idea what you're talking about. Large central banks (China and India, EU is next) are dumping UST and buying gold, and Newmont is preparing a hostile OPA of Barrick that could result in a strong upside movement for $B. OP will at least walk away with 10, maybe 20M.

pink_ego_box

It could but China is selling UST and hoarding gold (much more than officially reported, looking at LBMA/Comex outflows) so I don't see gold dumping, and no analyst sees gold under $5000 this year.

Jeff__Skilling

> but what happens when business operations are hindered by an unreliable administration and new alliances are made in the global sphere? be comforted by the fact that a single presidential term is finite in nature whereas the assets-in-place in the domestic US economy will continue to operate as a going concern long after he's out of office. that plus the fact that OP already mentioned -- people tend to be overly dramatic and prone to panic selling. which is doubly true for any of the investing subreddits. don't believe me? Go look at various sovereign debt spread spot + future rates against an equivalent UST bill or note with a similar quantum and maturity and tell us what you've found...

pink_ego_box

The US has to refinance 26% of its debt this year. But its biggest creditors, China and the EU central banks, are reducing their UST holdings in favor of gold. According to Goldman Sachs, gold holdings represent 0.18% of portfolios in the US. Morgan Stanley recommends a minimum 20% gold attribution in your portfolio this year to hedge possible hyperinflation. The rotation from fiat to monetary metals is just starting.

ThinkingOfTheOldDays

Just talking his book. Long time gold bull. UST demand & holdings making new highs https://x.com/i/status/2014207180870996348

Hairy_Parsnip7682

Shanghai deliverable trading $13 premium to comex and LBMA. Chinese export restrictions. US tariffs on many countries. Imminent boots on the ground in Iran. Rampant money printing. Collapse of JPY carry trade with UST bills being dumped. You sir are truly regarded

MsMoreCowbell828

Canada is supposed to be petrified at the mere thought of losing daddy trump. Canada is supposed to shite in their drawers because they can't function without daddy trump, since he believes them to be a little tiny pretend baby country. If Canada is too afraid to lose the UST, (US of Trump) they'll come crying home and beg daddy Trump for forgiveness! See, geopolitics in a bag.

robotlasagna

I didn't miss that. I was waiting to see if anyone would point out what you did. All this talk of funds selling off UST is bluster unless we see weakness on the buy side of the open market. The Treasury auction is the only true test of what the worlds demand for us debt is. If bids are really low at the next treasury auction that's when you know the US is in trouble.

Money_Do_2

This. It was always fugazi, and now its come home to roost Doesnt mean theyre not right, it just means theyre finally coming around. It will shift markets. However, capital never cares about this stuff really and chases returns. If the UST yield high enough, or the market dips low enough to be underpriced, itll come back. Not the small moral stand people, but the super-rich who dont care about borders anyways.

Technical_Scallion_2

This is my view as well. There's a definite sense from US exceptionalists that other nations will never make the choice to shift away from the US because the market is too big, returns are too great, USD/UST are world reserve currencies/securities, etc. But that argument ignores that over time, all of these advantages are lessened by the US acting crazy, and so leaving before the music stops is the right strategic move for our former world trade partners.

SameCategory546

it’s not replacement of USD as reserve currency. Is the partial (PARTIAL!) replacement of UST as reserve assets

pink_ego_box

Nothing has changed fundamentally. Every dip will be bought. Central banks from the BRICS are buying heavily and dumping UST. Now European central banks will do the same since the US is clearly becoming a threat to the continent's stability and territory. Poland just annouced a plan to buy 150 tons.

MsMoreCowbell828

Do you think Haliburton, Raytheon & General Dynamics are the only suppliers on earth? Other countries build & will ship their wares as the UST (United States of Trump) is rendered a pariah state, every other tech capable country on earth will swoop in to fulfill that need and the billions of dollars that go with it. *You* simply don't understand that trump just spit in the faces of every world leader, that he & his administration think they are nothings, then he belched out ridiculous fake 'history' of WWII, lies upon lies mixed with incandescent insults. They will ALL turn from us, they do NOT need the USA, for anything. Enjoy the coming Depression, what an interesting strategy though! 🤙

robotlasagna

If you are so fundamentally sure that is going to be the case then why don’t you post your short positions on UST? I have high conviction on my thesis and will buy if Europe dumps. I also want to point out when they started with the tariff stuff in April and everyone here was dooming I posted my thesis which was that I was buying any good company with a depressed share price and got downvoted for that too. My retirement is moved up 5 years just based on that one move.

robotlasagna

I am more than a little concerned that people in an investing sub lack basic economic understanding so I am just going to post response direct from a professional economist on the effects of a UST sell off back when China was threatening to do this: TEXT BELOW: I'll give you a 5min answer as I'm in a meeting. Hopefully someone else can expand. The idea is called 'sterilization' and China is 'unsertilizing' or 'floating' these bonds. But first we need to hit another basic economic principle: the UST printing a bond has exactly the same impact as printing cash. Think about it this way, in a 0% interest rate environment, a $100 bill is identical to a UST zero-coupon bond with X maturity. With me so far? If we add in an interest rate, the UST issuing (say) a 1yr UST zero with $100 maturity and an implied rate of (say) 3% is identical to the UST printing a purely hypothetical '$97 bill' today. Still with me? Lastly, we also know that any complex UST bond can be synthetically replicated with structured zero coupon bonds (and if necessary synthetic rate/inflation swaps). In plain english, you can buy a whole series of UST zeros that exactly replicate a UST bond that (say) pays $X every 6mo for 10yrs and then $Y at maturity, and you can do this for every UST security. In its simplest form, this whole market is called the Treasury STRIPS market, and its the 'mechanical link' that ties together floating USTs and 'to be issued' USTs. Think of it as a 'check' that makes sure that there are no arbitrages. (Side note: exploiting these small pricing differences between existing USTs, their synthetic counterparts, and 'on the run' USTs was the strategy that Long Term Capital Management was using....for a while.) So: printing bonds is the exact same as printing cash. I don't have the time to fully explain this now, but the 'moment of inflation' (eg, the exact timing of when the inflation occurs from printing cash v bonds is identical too.) Theres a TON of myth around people saying 'we have to print a ton of cash to pay off the deficit which will trigger inflation.' This is wrong - if you print to pay off a bond, there is no inflation impact b/c you experienced the inflation the moment the bond entered the economy. I used to use Monopoly to teach this to junior bankers back in the day. Now sterilization: a $100 bill 'impacts' the US economy to the extent that it is IN in the economy and transferring value between parties. This should be fairly intuitive. If you went to the UST in Washington DC, got your hands on a brand new $100 bill, and then spent it - that $100bill will contribute to the economy and have a micro, micro impact on the broader US economy. HOWEVER, if you take that $100 bill, and buried it in your back yard, it will never contribute to the economy - it has been 'sterilized'. Because we know that UST=$100bill, you could also take an off the run UST and bury it, it will be 'sterilized.' Now to China. For the past ~20 years, China has been the biggest foreign buyer of USTs (and Japan and Germany/Europe). They do this b/c they are trying to keep their currency cheap compared to the USD, but CHina is (by far) the biggest buyer. In plain english, we have been flooding the world with USTs and as a result, the USD should be a lot weaker than it is now. But a weak dollar is very bad for countries that import into the US. So those countries exposed to a weak USD, have been buying and sterilizing USTs for 20 years. This is the root of the US's claims that China is a currency manipulator - China has been buying USTs by the trillions - and 'sterilizing' them - to keep their currency cheap relative to the USD. Same with the Yen and to a far lesser degree the euro. But we have good relations with Japan/Europe, so we don't call them currency manipulators. Now China is threatening to reverse that by floating a chunk of their USTs. The impact will be to weaken the USD relative to other currencies.....which honestly isn't that big of a deal in my opinion. Just say for sake of argument that the USD weakens by 20% over the next year: oil will be ~$10/bbl more expensive, US imports will be a little more expensive and exports will be a little more valuable - but the trade gap won't move a ton as a % of GDP. It does have the impact of exacerbating the tariffs, which is a net 'bad'. Additionally, we could see a trickle through of somewhat higher inflation in the US, but an additional 2% to 3% inflation would probably be a good thing as long as its spread widely across the whole economy (eg, not just concentrated in, say, energy and housing). In econ terms, its 'pro-cyclical velocity', whcih we need right now. But in total, I don't know too many people that are really freaked out about it on Wall St - its an interesting talking point, but not a 'holy shit' thing. People are bracing for it the same way you'd brace for a ~100bps Fed rate cut (eg, just be ready for a weaker dollar), but the Fed can basically just raise/hold rates if it becomes an issue. If China were to really float all of their USTs and the yuan, it would devastate their economy b/c they would effectively price themselves out of the global economy. This was longer than 5min..... ME AGAIN: Those bonds getting sold go to other bondholders who still need to hold them to maturity. The inflation happened when the bonds were issued. If other countries stop buying NEW treasury issues then we experience inflation but not by selling them off.

robotlasagna

I would be cool with this. If Europe dumps you can pick up UST10Y super cheap on the secondary market and then wait until rates come back down. Because it's 10Y you can make \~40% return. As long as we buy stuff from China and especially if we don't buy as much stuff from Europe that money flows into China and right back into Treasuries which will drop rates back down.

CSMasterClass

Dumping treasuries would do a lot of self-harm. A buyer's strike is more feasible, but even that is only feasible if there are not massive funds from exports that pile up in foreign accounts. The time to develop an altelrnative to the dollar/UST world trade structure is more than a decade, and three years will not make too much of a dent.

sovlex

I'm appreciate the gesture but Daily turnover in UST exceeds 1 trillion$.

robotlasagna

Someone has to buy them. If Europeans are stupid enough to dump UST the resulting liquidity crunch would cause rates to skyrocket. I would be all in on buying UST10Y at 7-8%.

robotlasagna

If Europe sold out of UST Where do they put that money? There is not anywhere near enough liquidity to move that to German bunds or Eurobonds. It’s an empty threat.

csab123

There are several factors involved. Global Central banks desire to move away from holding UST, this has been the case since interest rates spiked from near 0% to 5% UST's lost a great deal of value, an issue sovereigns don't want to deal with again. Second is the printing of money by the FED, with no backing, the federal reserve note loses value over time. This brings up the third reason, a potential backing of currency by gold and/or silver or other commodities. Investors see this and begin to flock to these assets. Can this cause the price to get ahead of itself? Yes, does this mean it's done going up? No. Lastly is the inflation factor, commodities can be a good hedge against inflation. Add these all together and you get a perfect environment for silver and gold to run. I think several of these factors are in the rear view mirror and investors will start taking profits hence my argument for BTC, the current environment is more favorable for BTC than SLV or GLD. Could I be wrong? Yes

SideQuestNYC

Significant rate drops could trigger mega corps and banks borrowing more, maybe for stock buybacks and other investments where the ROI is greater than the FFR. Stocks should go up. If the USD tanks, foreign countries that need us could buy up more treasuries, increasing inflation. But some of the larger holdouts like china and japan could sell UST like Russia in 2018 before they tank for pennies on the dollar. Like an unpaid bill, Inflation will be left as the next administration's problem, probably blame the libs. "I have a feeling in a few years people are going to be doing what they always do when the economy tanks. They will be blaming immigrants and poor people."

AfterDarkAsset

You're correct in that demand has gone up - for both short & long term UST's. That demand is, however, from private buyers. Particularly noteworthy is the shift in demand for long term. From institutional buyers (like Central banks) to private players. I think this actually supports the thesis that US Treasuries are now being seen less as stable assets that institutions like to hold long term and in turn provides further stability to these bonds. A virtuous cycle. Private buyers are more profit focused in the short term and they will play treasuries with that goal in mind. I think, more fundamentally, the issue here is that the underlying global financial order/system itself is under question now. In the short term, momentum makes it seem like everything is fine on the surface - but countries are already making plays to reduce reliance on US Treasuries. You're starting to see the cracks but hard to say how it will fail - catastrophically or gradually. Or when it will fail. My hope is that these cracks are surface level and can be mended, as can the trust in US financial institutions /policy and the stability of US political system itself. It's all very deeply intertwined ofcourse.

FuckingJPMAlgos

Can someone explain this "my representatives will buy mortgage bonds worth $200B" thing like I am a regard? Will the US treasury buy 30yr UST bonds? Why the fuck would this pump $OPEN?

Worth_Transition5188

UST backed by Venezuelan oil

pmotiveforce

Imagine shorting silver when it's got massive industrial demand, the dollar is being debased, and the world is telling the USD/UST to fuck off. Not saying we might not have more fake sell offs like yesterday, but it will be higher in 1 month than it is now by at least 10%.

yayahi

no. luna was algo linked to it's stable coin, UST, so when UST debugged the entire mechanism of the coin kept burning itself. zcash is not linked to any stable source: im regarded

SHIBashoobadoza

Everything is computer but electricity has been removed from CPI basket. US has $9T debt rollover to do next year at 3.8% so they need that number lower. Stable coins forced to hold UST as assets. The computers took er jerbs

MyPolaina4ever

It went from -100 to +50 like 3 times today (UST100). Free money, up and down.

PurpleReign123

This is what happens when a country implements YCC: easy to implement but difficult to exit without disastrous consequences. BOJ started YCC in 2016, to keep 10-yr JGBs at zero, or slightly negative yields … when inflation rears its ugly head, they had to widen the YCC band … The US (via Bessent) is also thinking of YCC as one of its options to lower UST yields. But given a larger fraction of USTs are held by foreigners (than JGBs), the after-math would be even more disastrous. That’s not a worry for Trump nor Bessent because they will not be at the helm anymore but the American public will be the ones left holding the bag.

Inittowinit1104

Where’s your income earning instruments ? One global event like a dirty bomb and you lose 50% of your net worth or more. Where’s your hedge ? Gold? UST? That account is fine as account B. Yeah you “trade”it , but you need an account A - which is at least 40% income and 99% protected. Too many bull years have really distorted people. Shit happens. It’s not if but when. Imagine you lose your job for a few years. That income earning account can carry you hopefully. Your trading with absolute BULL care scenario. Doesn’t work that way.

Walternotwalter

The carry trade doesn't just involve bond arbitrage. You borrow yen to buy assets. It's not just borrowing Yen to buy UST's. DXY just broke its 200 DMA. First time in a long while. Japan is trying to reshore capital. "Carry Trade" doesn't encompass the reality of why US stocks have been hitting a wall despite good earnings. Neither does rising Japanese rates. They contribute but there isn't a single reason. Rising rates generally strengthen a currency but the Yen is falling. Why? Because the US will have to intervene with swap lines based on non negative real rates due to how the JCB has monetized such a massive portion of Japanese government debt. Their bank reserve requirements have been lowered. The government wants big growth regardless of inflation. My answer stands true. Smart money is going to head to Japan rather than the overpriced AI circle jerk here in the US building data centers that can't be turned on unless power plants are built. But I am actually trading on Tokyo. I will not just buy the Japan ETF and have my gains destroyed by SoftBank.

mbacandidate1

You typed a lot of words to say that people have favored risk assets in the past few years and are now favoring lower risk assets (bonds, cash, value). You have brought no value to explaining why this is occurring, which is what truly matters to understand where we will go from here (risk on vs risk off). The reason is a global drain on liquidity (fed net reserves from tga build up, reverse repo draw down, and QT along with Japanese increasing yields turning off the yen carry trade) AND increasing risk to a continuing jobs / housing market deterioration (2yr UST tanked and probability of a Dec cut increased with the massive jobs data we received). Go back to conserving with your AI.

LionRivr

If you mean CPI or PCE inflation, sure. But we know those numbers don’t accurately reflect reality. And what actual retail investor is buying AAA bonds? Treasuries do not outpace currency debasement. The dollar loses purchasing power faster than the 4 or 5% you can get with any bank CD or UST.

Inittowinit1104

Pick 15 stocks. Make sure they are liquid in options , make sure you have some interest in them and make them your universe. Learn the feel , pe, where and how they trade vs index moves , how the react to earnings or tariff etc. blows my mind when I see my partner screening 250 names looking for something then goes nuts when something happens and doesn’t know what’s what. 15 names in enough to find an opportunity everyday in at least 2. All you need. You should spend 51% of your time focusing on index vs vix, index vs 10 year UST or gold or bitcoin. Stop chasing shit you have zero feel for. You will thank me later. Absolutes? Never. I’ll hop into hood puts or crwn after a good report but down 30-40%. I have cnbc and Bloomberg tv on all day to start up with all names.

robis87

since you bozos removing everything from Posts, here you go 3 pages here Thinking of starting to DCA in size into Dutch long end. I‘m European so no UST for me – currency + trump risk for foreigners. But in essence DM correlation along the curve is pretty close to 1:1, albeit structural differences, liquidity etc and barring systemic shocks. Netherlands seem to be better positioned to take on most of the structural longer-term headwinds countries like Germany or France are facing – debt and fiscal spiral, social and political turmoil, relatively safe from the geopolitical risks. Being a small country, they are 5th GDP in the EU, financial and tech center, -1% decificit, 45% debt to GDP. Below will provide my thesis with both arguments and possible counter-arguments/hesitations. **Main thesis** – we are in a clearly deflationary environment: economy slowing in Europe for a few years now, even longer in China and starting to slow rather rapidly in the US too. Unemployment, esp underemployment growing surely. Inflation seems to be sticky only in a limited areas of economy. Plus, the influx of cheap Chinese goods into the EU. ***Then again,*** Europe is much later in the cycle, and in theory inflation might bounce. But in reality it’s more likely the US slow-down will be sharper, faster and might even bottom out sooner than the European. **Also**, the elephant in the room – stock market bubble and the potential credit crunch from the shady private credit, equity, regionals and commercial real estate (again, mainly in the US). **Plus,** it’s hilarious to see European stock market valuations completely detached from the economic reality. They pumping simply and purely because the Nasdaq is pumping. ***Another counter-argument*** \- it‘s pretty clear trump starting to panick at every market downturn, even with stocks -2% from ath (Sunday’s stimy shitposting goes to prove that). Point being, that he’ll probably do a lot of stupid, reckless inflationary shit once the real crisis arrives trying to grow his way out of it. So this one is somewhat twofold – inflationary/credibility risk for the long end; **but** EU core/EUR could be viewed as a more stable alternative. ***The last headwind*** I see for my strategy is the Dutch pension system restructuring where their 36 large pension funds will decrease substantially their EU’s long end acquisitions over the next 2 y. Could translate in at least EUR 200B of lower demand. Might not seem a lot, but different European long ends not the most liquid assets on earth, so defo not a plus. Thoughts and your own strategies?   **TL;DR:** Thinking to go big into core EU/Dutch long term bonds because of the deflationary environment we in/entering.

Inittowinit1104

lol. You’re a bitter mouse Mr. I have absolutely ZERO problems w saying I’m wrong and giving kudos to the rights. In a nutshell. End year 680 after 650/685 ranges in spy. After first week of January at some point testing 640-645 the following months and by mid year back to 675-685. Clear enough? For qqq following same pattern with higher highs/lows. Bitcoin might break 112k by year end but we might see 89k through next mid year. Recoup won’t be above 100k but mid high 90’s. UST will range 4.18/3.74 closer to the latter by mid next year. Nvdia will re test 211$ and 184$ but probably right around 205$ by mid next year. Best performer RELATIVE to its own historic volatility and price action will be APPLE. A slow unsexy dud. Newsom/AOC ticker will emerge and Spain will win the World Cup. Anything else 🤓😶‍🌫️😜?

Inittowinit1104

I never sell calls. Although I have a CFa and a series 7 they tend to complicate my life. After years my list is now 15 stocks , 6 indexes and vix and UST. After years I know them all by heart tick for tick. I see a divergence and I hit it. Only way for me.

EnvironmentalPear695

At least instead of the UST being the igniter of money, everything can flow into the giant money furnace of AI.

BranchDiligent8874

Not if his short strategy backfires though. That said, Michael may have kept 100 million in UST bonds separately, he is doing most of the adventure using OPM.

Inittowinit1104

Aversion to following UST bonds, junk bonds and things like equal weighted indexes. If you’re a fast money dte guy and you don’t follow these your cooked.

Brawmethius

Bessents homies bought tons of Argentinia bonds dirt fucking cheap. Then they got dirt fucking cheaper, and suddenly the UST will do literally "anything" to save their currency (bonds).

cwep2

I’ve recently started to take profit on gold though after this massive bull run. I had 10% as of 2020, upped that to 15% in 2022 when US/EU started seizing Russian assets (thinking CBs would diversify UST > Gold) and then to 20% when it broke the long term resistance level around 2000-2100 in March 2024. Just reduced it down to 20% again which meant selling around a quarter of what I had.