Yield Curve Seen Stepening
Monday, 26. November 2007, 05:11:23
November 22 – Bloomberg (Mark Gilbert): “Shifts in the U.S. Treasury market that have driven two-year note yields to 100 basis points below those on 10-year bonds for the first time since January 2005 are not healthy, according to Merrill Lynch & Co. ‘Do not, we repeat, do not believe for a second that this is a healthy steepening of the yield curve,’ wrote David Rosenberg, Merrill's…chief North America economist…”
Comments:
The yield curve measured in ETFs and the yield curve measured in rates is de-inverting; this is inflationary.
When the bond market perceives inflation, or when it is concerned that the U.S. Government is a credit risk, or when it is concerned that the Fed is no longer going to raise interes rates, then it will declare a defacto interest rate hike which will be seen in the 30 Year U.S. Treasury Interest Rate, $UST30Y going up; and the Long Term US Treasuries,TLT, going down.
Here is my quote: "Inflation: It's a bond killer and a gold thriller".
A steepening yield curve is good news for gold.
Chart of Gold
Futures market gold, $GOLD is traded by the cash market ETF, GLD.
Comments:
The yield curve measured in ETFs and the yield curve measured in rates is de-inverting; this is inflationary.
When the bond market perceives inflation, or when it is concerned that the U.S. Government is a credit risk, or when it is concerned that the Fed is no longer going to raise interes rates, then it will declare a defacto interest rate hike which will be seen in the 30 Year U.S. Treasury Interest Rate, $UST30Y going up; and the Long Term US Treasuries,TLT, going down.
Here is my quote: "Inflation: It's a bond killer and a gold thriller".
A steepening yield curve is good news for gold.
Chart of Gold
Futures market gold, $GOLD is traded by the cash market ETF, GLD.
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