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the_truman_shitshow
Member since Aug 2021
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Is anyone else worried that the chart for the 10-yr treasury yield is curving upwards?

What happens when it hits 5%? This will be historic (in a very very bad way).


Indefatigable
Member since Jan 2019
17180 posts
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Explain this to me as if I were someone who wandered around gas stations in a hoodie in August.
This post was edited on 9/21 at 2:53 pm


Flats
Georgia Tech Fan
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If I had any idea what that meant I might be worried.


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anc
Member since Nov 2012
16639 posts

What incredible times we are living in. Those of us with mortgages in the 2s are going to reap the financial benefits for generations.

We have Treasury yielding 4.1%. If it hits 5, investors will move money out of the market and into safer T-bills.
This post was edited on 9/21 at 2:58 pm


StringedInstruments
Auburn Fan
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quote:

Those of us with mortgages in the 2s are going to reap the financial benefits for generations.


Ohhh that’s me!

(What are the benefits, again?)


teke184
LSU Fan
Zachary, LA
Member since Jan 2007
80525 posts
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A house note that costs less than a loaf of bread.


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the_truman_shitshow
Member since Aug 2021
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Simply put, the higher the yield, the higher borrowing costs on debt, such as consumer loans and mortgages.

What does this mean?

Less affordability for new home buyers since borrowing rate will be too high, not to mention the risk that borrowers on a variable rate loan could potentially default if they can't make payments on a suddenly sky-high APR.

Stock market crash - cost of borrowing is inversely proportional to the growth rate of companies.

And everything else that follows like one big chain reaction. Oh ya, let's not forget that inflation is out of control so we have a situation of less money in people's bank accounts paired with sky-high prices on everything.

It's the perfect storm to cause a global economic meltdown.


BestBanker
USA Fan
Member since Nov 2011
16472 posts

While doing some research I read that Chi-nuh lowered their mortgage rates recently, as ours increases.

Interesting.


Indefatigable
Member since Jan 2019
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quote:

While doing some research I read that Chi-nuh lowered their mortgage rates recently, as ours increases.

I guess they need to incentivize their aging population to buy their 6th and 7th residences in order for someone to actually own all those ghost cities they have been building.


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SDVTiger
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Cabo San Lucas
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63435 posts

10yr is dropping now


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Big Scrub TX
LSU Fan
Member since Dec 2013
29211 posts

quote:

Is anyone else worried that the chart for the 10-yr treasury yield is curving upwards?
I mean, rates were way too low for way too long.

quote:

What happens when it hits 5%? This will be historic (in a very very bad way).
There was a time when 5% was comically low. There's nothing magical about 5%. Sitting at 3.5% now would have been eye-poppingly low for most Americans that ever lived.

If it actually does get to 5 (and I'm skeptical), it will have definite ramifications for sure.


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511
trinidadtiger
Member since Jun 2017
9981 posts

There you go.,,,,

quote:

Stagflation is the simultaneous appearance in an economy of slow growth, high unemployment, and rising prices. Once thought by economists to be impossible, stagflation has occurred repeatedly in the developed world since the 1970s. Policy solutions for slow growth tend to worsen inflation, and vice versa .


On another note, the reason the chinese lowered their rates is to try and fix the CATOSTROPHIC REAL ESTATE COLLAPSE ON THE HORIZON. And they are putting a band aid on a ripped apart aorta.


GumboPot
Georgetown Fan
Member since Mar 2009
103312 posts
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quote:

Explain this to me as if I were someone who wandered around gas stations in a hoodie in August.




It's going to cost congress a lot more money to spend more than the tax revenue they take in.


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21
LSUnKaty
LSU Fan
Katy, TX
Member since Dec 2008
4237 posts

quote:

Simply put, the higher the yield, the higher borrowing costs on debt, such as consumer loans and mortgages.

What does this mean?

Less affordability for new home buyers since borrowing rate will be too high, not to mention the risk that borrowers on a variable rate loan could potentially default if they can't make payments on a suddenly sky-high APR.

Stock market crash - cost of borrowing is inversely proportional to the growth rate of companies.

And everything else that follows like one big chain reaction.
Let's get some perspective here.

When I bought my first house we scoured the newspapers to find a rate in the 7% range and that was the absolute lowest you could get.

I remember 7+% treasuries, and double digit inflation. We all survived.

quote:

not to mention the risk that borrowers on a variable rate loan could potentially default if they can't make payments on a suddenly sky-high APR.
Anyone who has a variable rate loan right now is an idiot and must have known that at some point rates would rise from historic lows.

quote:

Stock market crash - cost of borrowing is inversely proportional to the growth rate of companies.
In Dec 2019 the DOW was around 22K. It's 30K today, less than 3 years later. That's a 35% gain in 3 years - AFTER an already 17.5% decline. And valuations are still at historic levels. Yes, the market may decline more, but anyone should have been able to see that coming and plan for it. When you take on too much risk you pay the cost.

Much better to quell inflation than to worry about rising interest rates. Inflation is a regressive tax that attacks the lower income and fixed income individuals the most.

If you are that worried maybe this would be a good time to reduce some of your risk and take advantage of those 5% rates. Just a thought.


GumboPot
Georgetown Fan
Member since Mar 2009
103312 posts
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quote:

Simply put, the higher the yield, the higher borrowing costs on debt, such as consumer loans and mortgages.



This is correct. Treasury bond yields set the floor for market interest rate products. Mortgages. Car loans. Boat loans. Etc., etc.

For example a bank would rather loan to you and me instead of taking their extra deposits and getting 5% yields in treasuries. They would rather loan their deposits to us for 7, 8 or 9%.


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Warfox
LSU Fan
B.R. Native (now in MA)
Member since Apr 2017
2339 posts

quote:

Stagflation is the simultaneous appearance in an economy of slow growth, high unemployment, and rising prices. Once thought by economists to be impossible, stagflation has occurred repeatedly in the developed world since the 1970s. Policy solutions for slow growth tend to worsen inflation, and vice versa .


This is one of the dangers of running a fiat currency monetary system. Just one of many reasons that we ought to return to a gold standard.


the_truman_shitshow
Member since Aug 2021
1702 posts
 Online 

quote:

Just one of many reasons that we ought to return to a gold standard


Ain't happening. JFK was murdered when he attempted to.


CleverUserName
Mississippi St. Fan
Member since Oct 2016
8918 posts

quote:

Ohhh that’s me! (What are the benefits, again?)


You are going to save mucho dinero compared to the people taking out mortgages now. 10’s of thousands in interest over the life of the loan. On a small loan.

You take that money and invest it yourself and make more mucho dinero.


RolltidePA
Alabama Fan
North Carolina
Member since Dec 2010
2472 posts

quote:

quote:
Just one of many reasons that we ought to return to a gold standard


Ain't happening. JFK was murdered when he attempted to.



Interesting since it was Nixon who took us off the gold standard.


"The government held the $35 per ounce price until August 15, 1971, when President Richard Nixon announced that the United States would no longer convert dollars to gold at a fixed value, thus completely abandoning the gold standard."


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Tigertittie
LSU Fan
Member since Sep 2021
171 posts

How the frick is that possible? Nixon abounded the gold standard after JFK was dead.


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