To The Moon

What are U.S. Treasury Bonds?U.S. Treasury bonds, commonly known as Treasuries, are essentially a loan to the U.S. government. Investors lend money to the government, earning fixed interest payments (coupons) and potentially profiting by trading them in the secondary market.How are Treasury prices and yields determined?While the face value of a bond is fixed, its purchase price fluctuates based on factors like time to maturity, coupon rate, and market expectations. For example, a bond with a face value of $1,000 might sell for $800 or $900 depending on these factors. If you hold the bond to maturity, your yield is essentially locked in. However, if you sell before maturity, market conditions impact your return: when interest rates fall, bond prices typically rise, resulting in higher retur

With the September FOMC meeting drawing near, bond markets anticipate additional rate cuts in the near future. The market’s attention has shifted from inflation data to the Federal Reserve’s policy moves, especially regarding interest rate adjustments.CPI Data Reveals Cooling InflationThe latest Consumer Price Index (CPI) data shows a moderation in inflation pressures. The CPI rose by 0.2% in August, aligning with market expectations. Meanwhile, the closely watched annual inflation rate dropped from 2.9% in July to 2.5%. Excluding the volatile food and energy prices, the core CPI increased by 0.3% in August, surpassing the expected 0.2%.Following the release of this data, the CME FedWatch tool indicated an 85% probability of a 25-basis-point rate cut at the upcoming FOMC meeting on Septemb

$iShares 20+ Year Treasury Bond ETF(TLT)$   "Interest rates, set by central banks like the Federal Reserve, play a crucial role in shaping economic conditions. When the Fed cuts interest rates, it reduces the cost of borrowing, which has a broad impact on the stock market and the economy as a whole. This presentation explores the effects of falling interest rates on different asset classes, including stocks, bonds, and real estate, as well as their impact on consumer behavior and corporate borrowing. We will delve into key concepts such as the ‘wealth effect,’ discount rates, and how rate cuts influence market expectations. Through real-world examples like the performance of the iShares 20+ Year Treasury Bond ETF

After the August CPI report, Nick Timiraos, known as the Fed’s "mouthpiece," wrote that the inflation rate dropped to a three-year low in August. This decrease might prompt the Fed to start gradually cutting rates at next week’s meeting.According to the Labor Department, August’s CPI rose by 2.5% year-over-year, down from 2.9% in July, marking the fifth consecutive month of cooling. Core CPI, which excludes volatile food and energy costs, remained steady at 3.2%.Despite a stronger-than-expected housing inflation in August, which could complicate a larger 50-basis-point cut, traders are betting on a more gradual policy easing by the Fed.Most Fed officials have signaled they’re ready to cut rates, and the CPI report isn’t expected to change that. This inflation relief offers some breathing r

The current state of the United States economy is at the center of the market's disagreement over the "rate-cutting cycle".Some participants believe that the U.S. is on the verge of a recession, while others emphasize the resilience of the economy and continued growth.Rate cuts and recession?Current market expectations for rate cuts stem from two main directions:If the U.S. economy falls into recession, the Fed may be forced to cut rates quickly (the first 50 basis points to start) to ease economic downward pressure;If the economy continues to be resilient, the Fed may also take precautionary rate cuts (starting at 25 basis points for the first time) to ensure that the economy achieves a soft landing.More than 70 common U.S. economic data indicators are divided into core, auxiliary and for