31 min
Everyone Wrong on Interest Rates | What Fed Funds Probabilities Really Mean Broken Pie Chart
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- Investing
Derek Moore discusses how everyone seemed to get the direction of rates across the yield curve wrong. How adding duration in hindsight was the wrong choice. Comparing market prognostications in 1995 to today. What the Fed Funds rate probabilities really measure. Plus, explaining why bonds make or lose money based it their duration (sensitivity to interest rates).
The bond market got rates wrong.
What is happening at the long end of the yield curve?
Why doesn’t the Fed have to lower rates without a recession or weakness.
Explaining what “duration” means with bonds.
How changes in interest rates make bonds go up or down.
Comparison of 10 year and 30-today year treasury yields vs June 1st.
Comparing yield curve today vs. 1995
What does the Fed Funds futures probability tracker measure?
Explaining what the implied interest rate is from looking at futures prices.
How Fed Funds futures are the markets’ view TODAY of where rates might be in the future.
How the Fed Funds futures market got interest rate trajectory wrong
Mentioned in this Episode:
S&P 500 Forward PE Valuations vs Future Returns | Volatility in Stock & Option Markets https://podcasts.apple.com/us/podcast/s-p-500-forward-pe-valuations-vs-future-returns-volatility/id1432836154?i=1000624302870
Liz Young’s article showing current forward PE ratios and subsequent 10-year market annualized returns https://www.sofi.com/article/investment-strategy/liz-looks-at-wrong-calls/
Cheapest (SPX) PUT Protection You've Ever Seen? | S&P 500 Index Rebalancing | Bank of Japan Hawkishnesshttps://podcasts.apple.com/us/podcast/cheapest-spx-put-protection-youve-ever-seen-s-p-500/id1432836154?i=1000623047871
Fed Funds CME probability tracker tool https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
LA Times Jan 1995 article on stock and bond market views https://www.latimes.com/archives/la-xpm-1995-01-01-fi-15454-story.html
Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt
Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag
Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr
Contact Derek derek.moore@zegafinancial.com
Derek Moore discusses how everyone seemed to get the direction of rates across the yield curve wrong. How adding duration in hindsight was the wrong choice. Comparing market prognostications in 1995 to today. What the Fed Funds rate probabilities really measure. Plus, explaining why bonds make or lose money based it their duration (sensitivity to interest rates).
The bond market got rates wrong.
What is happening at the long end of the yield curve?
Why doesn’t the Fed have to lower rates without a recession or weakness.
Explaining what “duration” means with bonds.
How changes in interest rates make bonds go up or down.
Comparison of 10 year and 30-today year treasury yields vs June 1st.
Comparing yield curve today vs. 1995
What does the Fed Funds futures probability tracker measure?
Explaining what the implied interest rate is from looking at futures prices.
How Fed Funds futures are the markets’ view TODAY of where rates might be in the future.
How the Fed Funds futures market got interest rate trajectory wrong
Mentioned in this Episode:
S&P 500 Forward PE Valuations vs Future Returns | Volatility in Stock & Option Markets https://podcasts.apple.com/us/podcast/s-p-500-forward-pe-valuations-vs-future-returns-volatility/id1432836154?i=1000624302870
Liz Young’s article showing current forward PE ratios and subsequent 10-year market annualized returns https://www.sofi.com/article/investment-strategy/liz-looks-at-wrong-calls/
Cheapest (SPX) PUT Protection You've Ever Seen? | S&P 500 Index Rebalancing | Bank of Japan Hawkishnesshttps://podcasts.apple.com/us/podcast/cheapest-spx-put-protection-youve-ever-seen-s-p-500/id1432836154?i=1000623047871
Fed Funds CME probability tracker tool https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
LA Times Jan 1995 article on stock and bond market views https://www.latimes.com/archives/la-xpm-1995-01-01-fi-15454-story.html
Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt
Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag
Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr
Contact Derek derek.moore@zegafinancial.com
31 min