World Government Bonds, Yields and Inverted Yields

Mauser

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Quote from: Catenaccio on October 26, 2023, 06:12:48 AM

The website worldgovernmentbonds.com gives us

The Global 10Y Bond Map
The Yield Table
The Inverted Yield Table

Just a few days ago there was another thread created showing all the countries and their government debt in relation to GDP. I found it alarming that so many countries are close to the 100% GDP level with their debt. There is no way that the majority of developed nations can reduce their debt levels considerably in the next 10-20 years. And now looking at the returns of the government debt I wonder who is actually still giving their money to the government. Comparing the short and medium term yields to the inflation rates it doesn't make any sense to buy anything below 5-10 year debt, and even then you are just offsetting your inflation losses and don't make any real returns. To me this seems like a really bad investment and traders don't except any government collapses to give them their money so freely. Nouriel Roubini has warned about the rising debt levels in his recent book Mega threats. If interest rates keep rising we could see a wave of government defaults and bond holders losing a lot of money. I would rather invest my money differently than buying government bonds.

Catenaccio

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Quote from: adaseb on October 29, 2023, 11:30:33 PM

The yield curve already uninverted on the 2s and 30s last week. The 2s and 10s is still inverted. Generally when this happens means something bad about to happen in financial markets. However it already did this in March and the government actually went and saved the banks.

However now many of these bank stocks are tanking. Even in Canada. So why are people dumping bank stocks. Mean something bad is happening in the background.

The map and tables with information on nations with inverted yield curves can help us to see and imagine about a big picture. With something bad in the background like you said, we only know bad things when governments fail to hide and at the times, black swan events occur.

adaseb

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The yield curve already uninverted on the 2s and 30s last week. The 2s and 10s is still inverted. Generally when this happens means something bad about to happen in financial markets. However it already did this in March and the government actually went and saved the banks.

However now many of these bank stocks are tanking. Even in Canada. So why are people dumping bank stocks. Mean something bad is happening in the background.

DaveF

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Quote from: stompix on October 27, 2023, 09:22:40 AM

Some Argentinians look tempting, 22 cents to $ right now, you could easily make 4x...assuming Argentina pays its debts and you don't get killed by a flying pig.

You might even start a riot if you have the wrong license plate on your car there: https://www.youtube.com/watch?v=KMiUUkmV5cA

The good thing about bonds is that for most countries they are a safe long term investment.
The downside is that if rates do go up you are locked into a lower rate for a long time. And if you need the money sooner you are going to have to sell at a loss.

As with anything financial. You have to do you. What works for me in my financial position with what is going on in my life now, may not work for what is going on with you.

-Dave

so98nn

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Quote from: el kaka22 on October 26, 2023, 11:28:18 PM

I am not sure if someone would be smart enough to do something like a Bond when they have small amount of money. Sure if you have like 50 billion to handle and you do not have anything to invest at that moment and 45 billion of your money is invested and yet 5 billion is doing nothing, then yeah you get that and it is a smart move. But, for people like us? Bonds mean nothing, in most cases it is even worse than the bank rates, so why would you want something that is even worse than the bank rates?

I would say it would make more sense to just buy bitcoin until first billion, which covers 99.99% of the world already, after your first billion in bitcoin, then you may start to consider something else, like gold maybe, still not Bonds, they are just horrible.

Haha, somehow I find this true. Not sure how successful anyone has been by investing in bonds but it is a sure thing for rich people. I have never heard anyone in my circle talking about the bonds even though they are in the trading and share market. Somehow Bonds have not reached in the hearts of common peeps (my belief) and it shall take lot of patience as well. We do have Gold Bonds available in the India but its not worth it since most of the indain families believe in buying the physical gold as traditional thing. You would find more Gold in the form of ornaments and jewelry being gifted in marriage than what it would cost them to perform the entire 6-15 days of ceremony in various castes. I highly doubt anyone of them would be interested in buying Gold Bonds. This is just reference but other bonds are literally far from such adoption. I would put more trust on the Bitcoin rather than putting my money on such thing.

stompix

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Quote from: el kaka22 on October 26, 2023, 11:28:18 PM

But, for people like us? Bonds mean nothing, in most cases it is even worse than the bank rates, so why would you want something that is even worse than the bank rates?

Because most countries in that list have never failed to pay their debts in the last century!And if they do so, you're screwed anyhow!

Some prefer security rather than gain, you can indeed make a ton of money from investing in Bitcoin but if you fail to do it at the right time?
Buying coins last November would have gained you 200%, buying the previous November and you would be at a 50% loss, some just down want to play with this and are aiming for security and a way to easily get their money out of it at any given moment!
When you ask yourself why some do what they do, you have to stop thinking as a Bitcoiner, it makes no sense to try to understand people when your mind is fixed on this, this is why gold bugs don't get Bitcoin, this is why oil investors are thinking the solar industry is doomed, some people don't understand another kind of investment and they don't want to ever do, they are happy as they are and that's it!

Now, to make things far more interesting, do you know what backing 70 billion out of 85 billion in Tether? Grin

Quote from: DaveF on October 27, 2023, 08:29:58 AM

You might get lucky with a 10% APR yield bond. Or that countries economy might implode.

Some Argentinians look tempting, 22 cents to $ right now, you could easily make 4x...assuming Argentina pays its debts and you don't get killed by a flying pig.

pinggoki

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Quote from: DaveF on October 27, 2023, 08:29:58 AM

Quote from: pinggoki on October 27, 2023, 07:59:22 AM

~

Depends on where you are in the world.
US is simple, straight from the government: https://treasurydirect.gov/savings-bonds/buy-a-bond/

The question comes down to, is are they worth it? For a safe stable income yes. But you are never going to get rich with them if you go for safe ones.
Much like anything else. You might get lucky with a 10% APR yield bond. Or that countries economy might implode.

-Dave

I did a bit of Google searching about bonds and to my understanding, they're like IOU from the government, you lend them your money and then the government gives you the paper like some sort of proof that they owe you some money and hopefully they can pay you with a little interest. I envy the US in terms of ease in investing, in my country, there's a lot of hoops and loops that you have to jump through just to be qualified and when you're qualified, you will realize that it's not worth it to invest in that investment anyways.

DaveF

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Quote from: pinggoki on October 27, 2023, 07:59:22 AM

Quote from: el kaka22 on October 26, 2023, 11:28:18 PM

I am not sure if someone would be smart enough to do something like a Bond when they have small amount of money. Sure if you have like 50 billion to handle and you do not have anything to invest at that moment and 45 billion of your money is invested and yet 5 billion is doing nothing, then yeah you get that and it is a smart move. But, for people like us? Bonds mean nothing, in most cases it is even worse than the bank rates, so why would you want something that is even worse than the bank rates?

I would say it would make more sense to just buy bitcoin until first billion, which covers 99.99% of the world already, after your first billion in bitcoin, then you may start to consider something else, like gold maybe, still not Bonds, they are just horrible.

Bond isn't easy to invest in if I recall, don't they only sell it or allow citizens to invest in it during wartime? Iirc aren't they called war bonds or there are other types of government bonds out there that you can invest in even during times of peace? What I'm getting from this post is that you're probably going to need a lot of money to invest in bonds right? Also why are bonds a horrible investment? I'm curious about this one.

Depends on where you are in the world.
US is simple, straight from the government: https://treasurydirect.gov/savings-bonds/buy-a-bond/

The question comes down to, is are they worth it? For a safe stable income yes. But you are never going to get rich with them if you go for safe ones.
Much like anything else. You might get lucky with a 10% APR yield bond. Or that countries economy might implode.

-Dave

pinggoki

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Quote from: el kaka22 on October 26, 2023, 11:28:18 PM

I am not sure if someone would be smart enough to do something like a Bond when they have small amount of money. Sure if you have like 50 billion to handle and you do not have anything to invest at that moment and 45 billion of your money is invested and yet 5 billion is doing nothing, then yeah you get that and it is a smart move. But, for people like us? Bonds mean nothing, in most cases it is even worse than the bank rates, so why would you want something that is even worse than the bank rates?

I would say it would make more sense to just buy bitcoin until first billion, which covers 99.99% of the world already, after your first billion in bitcoin, then you may start to consider something else, like gold maybe, still not Bonds, they are just horrible.

Bond isn't easy to invest in if I recall, don't they only sell it or allow citizens to invest in it during wartime? Iirc aren't they called war bonds or there are other types of government bonds out there that you can invest in even during times of peace? What I'm getting from this post is that you're probably going to need a lot of money to invest in bonds right? Also why are bonds a horrible investment? I'm curious about this one.

Catenaccio

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I did not think individual investors would prefer to choose bonds but if they are institutional investors, banks, they would choose bonds.

I agree that bonds are honey pots from governments and central banks but those entities can change policies so bonds today will be worse than bonds two or three years later. Like bank collapse in the USA. they got it because their wrong belief and bad investments in the USA bonds.

When investors, customers come to withdraw money and banks don't have cash in treasury, they have to sell their bonds with loss. Worse, fud will occurs and bankrun happens consequently.

All began by governements and central banks.

Jawhead999

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Quote from: el kaka22 on October 26, 2023, 11:28:18 PM

I would say it would make more sense to just buy bitcoin until first billion, which covers 99.99% of the world already, after your first billion in bitcoin, then you may start to consider something else, like gold maybe, still not Bonds, they are just horrible.

Yeah, bonds are just another way to enrich the government similar like they suggest people to save and hold their money in banks. That's why bonds, term deposit etc are always shown in investment or financial courses. Hopefully people shouldn't be tricked by the government and choose a better investment.

Quote from: Catenaccio on October 26, 2023, 06:12:48 AM

Quote

With an inverted yield curve, the yield decreases the farther away the maturity date is. Sometimes referred to as a negative yield curve, the inverted curve has proven in the past to be a reliable indicator of a recession.

Inverted yield occur if you choose to invest in floating-rate bonds, but if you invest in fixed-rate bonds you will always receive a same interest rate every month regardless the economy situation in your country.

el kaka22

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I am not sure if someone would be smart enough to do something like a Bond when they have small amount of money. Sure if you have like 50 billion to handle and you do not have anything to invest at that moment and 45 billion of your money is invested and yet 5 billion is doing nothing, then yeah you get that and it is a smart move. But, for people like us? Bonds mean nothing, in most cases it is even worse than the bank rates, so why would you want something that is even worse than the bank rates?

I would say it would make more sense to just buy bitcoin until first billion, which covers 99.99% of the world already, after your first billion in bitcoin, then you may start to consider something else, like gold maybe, still not Bonds, they are just horrible.

Catenaccio

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The website worldgovernmentbonds.com gives us

The Global 10Y Bond Map
The Yield Table
The Inverted Yield Table

The Global Bond Map

The Yield Table

The Inverted Yield Table
What is an Inverted Yield Curve?
Inverted Yield Curve: Definition, What It Can Tell Investors, and Examples

Quote

An inverted yield curve shows that long-term interest rates are less than short-term interest rates.

With an inverted yield curve, the yield decreases the farther away the maturity date is. Sometimes referred to as a negative yield curve, the inverted curve has proven in the past to be a reliable indicator of a recession.

With over inflation since Covid-19 globally, let's see how many countries have Inverted Yield Curve. You will be shocked to see that there are 26 countries have it.
It's not coincidence that there are some bankruptcies from the USA. to Europe in 2023. They are consequences of money printing and Inverted Yield Curves then bankruns.

Quote

26 countries have an inverted yield curve.

An inverted yield curve is an interest rate environment in which long-term bonds have a lower yield than short-term ones.

An inverted yield curve is often considered a predictor of economic recession.

Topic: World Government Bonds, Yields and Inverted Yields (Read 164 times)