‘Investors Run Out of Havens’ — An Erratic Pattern in US Bond Markets points to Deep Recession, Elevated State Risk

The yields on U.S. Treasuries with long maturities have been volatile this year. This week, the 10-year Treasury yield surpassed 3.5% for only the second time in a decade. The Fed's 75bps rate hike saw 10-year Treasury notes rise to 3.642%, while two-year Treasury notes rose to a record high of 4.090% after the Fed raised their base points rate by 75bps. The curve between the 10- and 2-year notes suggests that the odds of a deep U.S. depression have increased. Recent reports indicate that bond traders have been "confronted by the wildest volatility in their careers strong>

2 Quarters Negative GDP, Red Hot Inflation and Extremely Volatile TF-Notes

After the second quarter of negative gross domestic products (GDP) for the third consecutive quarter, a number economists and market strategists stated that the U.S. was in recession at the end of July. The Biden administration disagreed, and the White House published a White House article that explains the National Bureau of Economic Research's definition of the beginning of a recession. Red-hot inflation is causing havoc in America, and market analysts believe that rising prices are also pointing to a recession.

The yield curve is one of the most important signals. It measures short-term and long-term debts by comparing the yields on two-year Treasury notes. An inverted yield curve, according to many analysts, is one of the most reliable indicators that a recession is imminent. Although the inverted yield curve may seem unusual, it is not common in 2022. This is because bond traders have had to deal with crazy trading conditions this year. The yields of the two-year and 10-year Treasury notes (T-notes) broke records this week. On September 19, the 10-year T note surpassed 3.5% for the first-time since 2011. The two-year Treasury note (T-note) reached a new 15-year high of 3.97% on the same day. This was the highest level since 2007.

Professional traders believe that bond market volatility is a sign that the U.S. economy is weakening. However, they also claim that bond markets are exciting and fun. According to Bloomberg, Liz Capo McCormick and Michael MacKenzie, Bloomberg authors, bond markets "are characterized by sudden and broad daily swings that are usually a favorable environment for dealers and traders." Paul Hamill, head of global fixed income distribution at Citadel Securities, agrees with the Bloomberg reporters.

Hamill stated that "we are in the sweet spot" of rates being an interesting market and clients being excited about trading. "Everyone spends all day talking with clients and talking to one another. It's been great fun!"

Sovereign risk rises, yield curve between 2- and 10-year T-Notes slips to 58bps — BMO Capital Markets analyst says 'Investors are running out of Havens'

Not everyone believes that the volatility in bond and equity markets is fun and games. Todd Horwitz, chief strategist at bubbatrading.com said recently that he expected to see a "50-60 percent haircut" in equity market. Market strategists are concerned about the looming economic problems because of recent U.S. Treasury yield volatility fluctuations. Michael Gayed (Lead-Lag Report publisher, portfolio manager) warned that an unstable bond market could lead to a sovereign debt crisis as well as "several black Swans" during the first week in September.

Research and empirical evidence have shown that a volatile U.S. Treasury market is bad for countries with U.S. Treasury notes and dealings with large debt issues. Because U.S. Treasury notes can be leveraged for restructuring purposes or as a resolution tool, countries that use these financial instruments for debt restructuring may suffer sudden and sweeping daily swings. In a multitude of countries around the world, sovereign risk has increased since the Covid-19 pandemic and massive U.S. stimulus programmes.

MacKenzie & McCormick, Bloomberg's authors, quoted Ian Lyngen from BMO Capital Markets. The analyst said that there is less of these so-called safe havens. Lyngen stated that this week would be "a defining week in Fed rate expectations between now & the end of the calendar year." Lyngen spoke just before the Fed increased the federal funds rate 75 basis points. Lyngen noted that investors don't want to wait long for the market. Investors are running out of options as we move to an aggressive monetary policy stance.

The yield curve between the T-notes of the two-year and 10-year T-notes fell to 58bps on Thursday. This is a record low since 1982, when it was at its lowest point. The yield curve between the T-notes of the two-year and 10-year is at 0.51% as of the writing. The crypto economy has fallen 0.85% in the last 24 hours, and is now at $918.12 million. The price of gold per ounce has fallen by 0.14 percent and silver is down by 0.288%. On Thursday, equity markets opened lower as all four major indexes (Dow S&P500 Nasdaq, Nasdaq and NYSE) suffered losses.

What are your thoughts on the unpredictable bond markets of 2022? And the signals that indicate the economy and safe-havens are not reliable these days? Please comment below to let us know your thoughts on this topic.

Frequently Asked Questions

What is the Performance of Gold as an Investment?

Supply and demand determine the gold price. It is also affected by interest rates.

Due to their limited supply, gold prices fluctuate. There is also a risk in owning gold, as you must store it somewhere.

Can I have physical gold in my IRA

Gold is money. Not just paper currency. People have been using gold for thousands of years to store their wealth and protect it from economic instability and inflation. Today, investors use gold as part of a diversified portfolio because gold tends to do better during financial turmoil.

Today, Americans prefer precious metals like silver and gold to stocks and bonds. Although owning gold does not guarantee that you will make money investing in it, there are many reasons to consider adding gold into your retirement portfolio.

Another reason is the fact that gold historically has performed better than other assets in times of financial panic. Between August 2011 and early 2013 gold prices soared nearly 100 percent, while the S&P 500 plunged 21 percent. Gold was one of the few assets that performed better than stocks during turbulent market conditions.

Another benefit to investing in gold? It has virtually zero counterparty exposure. You still have your shares even if your stock portfolio falls. You can still own your gold even if the company where you invested fails to pay its debt.

Finally, gold provides liquidity. This allows you to sell your gold whenever you want, unlike many other investments. The liquidity of gold makes it a good investment. This allows you take advantage of the short-term fluctuations that occur in the gold markets.

Should You Invest in Gold for Retirement?

It depends on how much you have saved and if gold was available at the time you started saving. Consider investing in both.

You can earn potential returns on your investment of gold. It is a good choice for retirees.

Although most investments promise a fixed rate of return, gold is more volatile than others. As a result, its value changes over time.

But this doesn't mean you shouldn't invest in gold. It is important to consider the fluctuations when planning your portfolio.

Another benefit to gold is its tangible value. Gold is more convenient than bonds or stocks because it can be stored easily. It's also portable.

Your gold will always be accessible as long you keep it in a safe place. Physical gold is not subject to storage fees.

Investing in gold can help protect against inflation. Gold prices are likely to rise with other commodities so it is a good way of protecting against rising costs.

Additionally, it will be a benefit to have some of your savings invested into something that won't lose value. Gold usually rises when stocks fall.

Another advantage to investing in gold is the ability to sell it whenever you wish. As with stocks, your position can be liquidated whenever you require cash. It doesn't matter if you are retiring.

If you do decide to invest in gold, make sure to diversify your holdings. You shouldn't try to put all of your eggs into one basket.

You shouldn't buy too little at once. Start by purchasing a few ounces. You can add more as you need.

The goal is not to become rich quick. Instead, the goal is to accumulate enough wealth that you don't have to rely on Social Security.

Gold may not be the most attractive investment, but it could be a great complement to any retirement strategy.

Are gold investments a good idea for an IRA?

For anyone who wants to save some money, gold can be a good investment. You can diversify your portfolio with gold. But there is more to gold than meets the eye.

It's been used as a form of payment throughout history. It is often called “the most ancient currency in the universe.”

Gold is not created by governments, but it is extracted from the earth. That makes it very valuable because it's rare and hard to create.

Gold prices fluctuate based on demand and supply. When the economy is strong, people tend to spend more money, which means fewer people mine gold. The result is that gold's value increases.

The flip side is that people tend to save money when the economy slows. This increases the production of gold, which in turn drives down its value.

This is why both individuals as well as businesses can benefit from investing in gold. If you invest in gold, you'll benefit whenever the economy grows.

Your investments will also generate interest, which can help you increase your wealth. You won't lose your money if gold prices drop.

What is a Precious Metal IRA, and how can you get one?

A precious metal IRA allows you to diversify your retirement savings into gold, silver, platinum, palladium, rhodium, iridium, osmium, and other rare metals. These are “precious metals” because they are hard to find, and therefore very valuable. These are good investments for your cash and will help you protect yourself from economic instability and inflation.

Precious metals often refer to themselves as “bullion.” Bullion is the physical metal.

Bullion can be bought via various channels, such as online retailers, large coin dealers and grocery stores.

An IRA for precious metals allows you to directly invest in bullion instead of purchasing stock shares. This means you'll receive dividends every year.

Precious metal IRAs are not like regular IRAs. They don't need paperwork and don't have to be renewed annually. Instead, you pay only a small percentage tax on your gains. You also have unlimited access to your funds whenever and wherever you wish.

How to Open a Precious Metal IRA?

The first step in opening an Individual Retirement Account, (IRA), is to decide if it's something you want. You must complete Form 8606 to open an account. For you to determine the type and eligibility for which IRA, you need Form 5204. This form must be submitted within 60 days of the account opening. Once this has been completed, you can begin investing. You can also contribute directly to your paycheck via payroll deduction.

Complete Form 8903 if your Roth IRA option is chosen. Otherwise, it will be the same process as an ordinary IRA.

To be eligible to have a precious metals IRA you must meet certain criteria. You must be at least 18 years of age and have earned income to qualify for a precious metals IRA. Your earnings cannot exceed $110,000 per year ($220,000 if married and filing jointly) for any single tax year. And, you have to make contributions regularly. These rules are applicable whether you contribute through your employer or directly from the paychecks.

You can invest in precious metals IRAs to buy gold, palladium and platinum. However, you can't purchase physical bullion. This means you won’t be able to trade stocks and bonds.

To invest directly in precious metals companies, you can also use precious metals IRA. This option is available from some IRA providers.

There are two major drawbacks to investing via an IRA in precious metals. First, they aren't as liquid than stocks and bonds. It is therefore harder to sell them when required. Second, they don’t produce dividends like stocks or bonds. You'll lose your money over time, rather than making it.


  • Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
  • You can only purchase gold bars at least 99.5% purity. (forbes.com)
  • (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
  • Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
  • If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)

External Links





How To

The best way online to buy gold or silver

You must first understand the workings of gold before you can purchase it. The precious metal gold is similar to platinum. It's very rare, and it is often used as money for its durability and resistance. It is difficult to use so people prefer to buy jewelry made from it to gold bars.

Two types of gold coins are available today: the legal tender type and the bullion type. Legal tender coins are designed for circulation in a country. They often have denominations like $1 or $5 or $10.

Bullion coins can only be used as investment currency. They increase in value due to inflation.

They are not exchangeable in any currency exchange system. For example, a person who buys $100 worth or gold gets 100 grams. This gold has a $100 price. Each dollar spent earns the buyer 1 gram gold.

When you are looking to purchase gold, the next thing to know is where to get it. There are many options for buying gold directly from dealers. First off, you can go through your local coin shop. You can also go to a reputable website such as eBay. You may also be interested in buying gold through private sellers online.

Private sellers are individuals who offer to sell gold at retail or wholesale prices. When selling gold through private sellers, you pay a commission fee of 10% to 15% per transaction. Private sellers will typically get you less than a coin shop, eBay or other online retailers. However, this option is often a great choice when investing in gold since it gives you more control over the item's price.

The other option is to purchase physical gold. Although physical gold is easier to store than paper certificates you will still need to ensure it is safe. Physical gold must be kept safe in an impassible container, such as a vault.

To purchase gold by yourself, you can visit a bank and a pawnshop. A bank can give you a loan up to the amount you intend to invest in Gold. Small establishments that allow customers to borrow money for items they have brought are called pawnshops. Banks tend to charge higher interest rates, while pawnshops are typically lower.

Finally, another way to buy gold is to simply ask someone else to do it! Selling gold is easy too. Set up a simple account with GoldMoney.com and you will start receiving payments instantly.


By: Jamie Redman
Title: ‘Investors Are Running out of Havens’ — Erratic Behavior in US Bond Markets Points to Deep Recession, Elevated Sovereign Risk
Sourced From: news.bitcoin.com/investors-are-running-out-of-havens-erratic-behavior-in-us-bond-markets-points-to-deep-recession-elevated-sovereign-risk/
Published Date: Thu, 22 Sep 2022 16:00:40 +0000

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