Post ApuLX7GSXRBYDlgatU by kentwillard@zirk.us
 (DIR) More posts by kentwillard@zirk.us
 (DIR) Post #ApsKGXVrgmbjeFg22S by interfluidity@zirk.us
       2025-01-08T14:41:24Z
       
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       it’s just hard to reconcile the FX market and the bond market right now.
       
 (DIR) Post #ApsKO6QQHhvTxBjoAa by realcaseyrollins@noauthority.social
       2025-01-08T14:42:47Z
       
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       @interfluidity How so? What's going on? I admit I'm not really tapped into what's happening rn.
       
 (DIR) Post #ApsKhrAUie3gQWhsum by interfluidity@zirk.us
       2025-01-08T14:46:20Z
       
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       @realcaseyrollins the USD is really strong. usually that suggests low inflation expectations, people don’t want to buy or hold a currency expected to depreciate relative to other currencies, which a higher inflation rate than in other countries should provoke. 1/
       
 (DIR) Post #ApsKkSayXLu75HKo2i by interfluidity@zirk.us
       2025-01-08T14:46:49Z
       
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       @realcaseyrollins at the same time, long-term bond yields are rising sharply, despite the Fed cutting short-term rates. that suggests over time the market expects the Fed will be forced to re-raise rates pretty sharply, which suggests a prediction of inflation pressures. 2/
       
 (DIR) Post #ApsKzHPkOFyaka9JdA by interfluidity@zirk.us
       2025-01-08T14:49:29Z
       
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       @realcaseyrollins so, these things are hard to reconcile. dollar strength can be explained as a preaction to tariffs, but if so that should mute any price effect of the tariffs. something is missing from my understanding or analysis, something doesn’t add up. /fin
       
 (DIR) Post #ApsMXUsMwkAaIiPttQ by realcaseyrollins@noauthority.social
       2025-01-08T15:06:53Z
       
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       @interfluidity What's FX, #Forex? Doesn't that just contain current prices, rather than being particularly anticipatory?In that case, I'd expect the bond market to indicate where the #USD will go in the future.
       
 (DIR) Post #ApsMkEGm03V6Ysu1yK by interfluidity@zirk.us
       2025-01-08T15:09:11Z
       
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       @realcaseyrollins it is current foreign exchange prices. but it’s weird that it should rise if the expectation is it’s to decline because inflation. (that said, there are some “overshoot” models of FX pricing that might actually be consistent with rise-to-fall. i need to look those up, it’s been a long time.)
       
 (DIR) Post #ApsNr8b1ak30wnEWdk by interfluidity@zirk.us
       2025-01-08T15:21:38Z
       
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       @realcaseyrollins https://en.wikipedia.org/wiki/Overshooting_model
       
 (DIR) Post #AptBOt5odPXwSqMHRY by dpp@mastodon.social
       2025-01-09T00:36:44Z
       
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       @interfluidity look at the betas on this market… wow!
       
 (DIR) Post #AptGjXZ2N9f7Xvh56W by interfluidity@zirk.us
       2025-01-09T01:36:32Z
       
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       @dpp Microsoft is down below 1, less risky aparently than the broad market…
       
 (DIR) Post #ApuLX7GSXRBYDlgatU by kentwillard@zirk.us
       2025-01-09T14:05:01Z
       
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       @interfluidity There should be a large term premium for long-duration bonds, given all of the policy uncertainty now. I think investors assumed they would get their premium through the Fed lowering the short-end. Nope, so now they priced it in. I bet it reverts to at least historical norms.