Is it time to go back to F?

[coolhand]

Had I remembered that Wednesday was an FOMC rate decision day, I may have been more apt to make that IFT. Uh, oh! Could they raise rates tomorrow?

If they did it would be a complete surprise to most. I don't think they believe all that BS they feed us either, so why tank the market now?

Or would it tank? :nuts:

 

[XL-entLady]

Had I remembered that Wednesday was an FOMC rate decision day, I may have been more apt to make that IFT. Uh, oh! Could they raise rates tomorrow?

But I think you raise a very important point. I'd like to clarify for the newbies and for me too. If interest rates start to go up and/or inflation rates start to rise, then F Fund is the place to be, right?

 

[Bullitt]

Rising interest rates and/or inflation are bad for bond prices and cause yields to rise. Basically, think of a dividend paying stock. When the yield is dropping, price is rising (unless it's a crooked bank that cut the dividend of course). When yield is rising, price is dropping. In a perfect trade you want to get into a bond when you believe yields have peaked for a cycle.

Inflation is non-existent in this economy. If Ben and Co. threw a couple trillion of not only mine, but my kids and grand kids futures into a bailout stew so dumb California home buyers can continue to buy GM cars and iPods- and all we're getting is 1.5% YOY rise in food prices- then I can't buy the inflation story.

Bond Link:http://www.businessweek.com/news/201...-update2-.html

 

[tsptalk]

But I think you raise a very important point. I'd like to clarify for the newbies and for me too. If interest rates start to go up and/or inflation rates start to rise, then F Fund is the place to be, right?

Yeah, what bullitt said. The chances are that the Fed won't raise rates (as coolhand said), but I think I would have preferred to take profits in the F-fund just in case they do. As I mentioned, yields have come down this month, hitting my initial target (bonds and F-fund up) so I should be getting out, but didn't want to use that last IFT. If they happen to raise rates Wed., I'd probably be giving back those profits.

 

[JTH]

Tom, I realize you've met your target, but since I can't see your allocation I have to ask, are you selling your winner?

 

[Bullitt]

F Fund really is difficult to play, and I don't care for it too much because it's too diverse, but given the circumstances with a pullback (at least) on the horizon, I figured it's time to put some money in.

I think we're going to see the 10 year go down to around 3.00-3.20% when this thing corrects. I guess, and going back to my thoughts at the end of 2009, that eventually we will see those yields rise when that major reverse head and shoulders pattern confirms; but I'm betting on one more ride down on the yields before that.

 

[tsptalk]

Tom, I realize you've met your target, but since I can't see your allocation I have to ask, are you selling your winner?

I haven't yet, but as I mentioed above, I am thinking maybe I should have - just in case the fed does something unusual Wednesday, like raise rates.

 

[JTH]

This is one of my favorite channels to watch. It's the 10-year yield on the Monthly time frame.

View attachment 9154

 

[tsptalk]

This is one of my favorite channels to watch. It's the 10-year yield on the Monthly time frame.

That's the channel that will likely break (upside) some time in the next 12 - 18 months. Of course everyone is saying that, so... :suspicious:

As bullitt pointed out, there is that large inverse H&S going back to 2007. The initial target would be 5.5% to 6%.