"Stock markets, which have fully devolved into a circus animal responding to the one stimulus they know, bought the dip hard on the president's word. Even before this insane AI rally where stock markets are doing their best crypto impression, the concept of smart money in finance was not defined by the number-go-up traders on the floor of the New York Stock Exchange."
"Interest rates are just the price of money, and they are expressions of expected economic growth, inflation fears, and risk. Stock markets get all the hype in our shallow media environment, but there's a reason why the largest and most liquid market in the entire world trades on what is known as 'risk-free' debt."
"All of finance begins with the notion that you can lend the United States government money for various periods of time and guaran-damn-tee yourself a certain return, and all investment decisions are based on the risk you must take relative to what is, or maybe was, considered to be 'risk-free' debt."
"The yield curve—the interest rates paid out by the 3 month, 6 month, 1, 2, 3, 5, 7, 10, 20 and 30-year U.S. Treasury Bonds—told a very different and more cautious story than the stock market's exuberance."
A ceasefire announcement led to a surge in stock markets, reflecting a speculative response. However, the risk-free debt markets, represented by U.S. Treasury yields, did not share this optimism. Interest rates are crucial indicators of economic conditions, and the disparity between stock market reactions and Treasury yields suggests underlying concerns about the sustainability of the ceasefire and broader economic stability. The traditional view of U.S. Treasuries as a safe investment is being challenged amid current market volatility.
Read at Jezebel
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