Quote:
Originally Posted by Sooner or later
Those bond rates are set by market expectations and not by the Fed.
Buyers are concerned about global economic health so more money tends to move to bonds and out of more risky holdings. When more money chases bonds the price is higher which translates to a lower yield.
Basically, bond buyers are concerned about economic growth and are trying to lock in long term rates that they think will be lower moving forward.
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This means the Institutional guys are REAL Worried about the economy. Which in a normal world would dampen Equities...but that is not the case..money is flowing into Equities.
The FED REASSURES investors with their guaranteed activism. It is providing a monetary safety net. Since 2012 except for part of 18.That gives the investors license to move money into equities..so that many pension funds can remain solvent. The risk of equities becomes acceptable with the FED guarantee
Take awAy that FED guarantee and equities tank like in December. Which was a normal world response to the real .economic conditions.
The rational behind the machinations is to keep the lights on and the economy turning. Otherwise.......