been a day trader since 2008 but I realize that soon it may be time to jump into long term Treasuries and Im looking at the 30 yr bond. I am a noobie to bonds but have been studying the basics
My idea is to watch the Fed Prime rate until it PEAKS and then try to jump into a 30 yr T-Bond with a yield of 6% or greater.
Is this idea a possibility ???? I remember in 1980 when the Fed rate hit 21.5% but I was only 22 and starving to death.
Can any of you smart folks tell me what would signal the End of The Fed raising Rates ?????
My thoughts are that when Inflation is around 2% ( the feds target) it would be the time to jump into a 30 yr Tbond.
I think we're seeing the beginning (not the end) of it, with the layoffs of big tech employees. Amazon is going to lay of 10,000 employees -- right as they hit their busiest season of the year. Meta is laying people off. Others will follow.
Besides the Russian/Ukraine war and supply chain issues, one of the reasons for sticky inflation is that the people who benefited the most from the highly unique conditions of the pandemic economy have a shit ton of money and until right around now, they've had nice jobs that pay them a lot of money -- in addition to having stayed home and zoomed during the pandemic and receiving stimulus checks. These high tech employees and households are probably (aside from rapacious corporate profits) the biggest non-war and non-supply chain cause of inflation.
The big layoffs that have just started and are sure to continue will be bifurcated: the Uber and Amazon drivers and lower wage service employees will probably keep on working. The higher-paid middle managers and tech workers are going to get shafted. Unlike most waves of job losses, this will be a white collar recession. The growth isn't there for these companies anymore, and they will have to shed all that excess pandemic-era labor that they brought on to deal with the surge in demand in 2020-21.
It's estimated that collective HH savings is at $1.5 T - down from $2 to 2.5 T a year ago, but still a ways to go before companies rebalance the economy in favor of employers. The Fed wanted a recession, particularly a white collar recession, because they wanted to avoid a runaway wage-spiral inflation scenario in which higher earners keep spending, keep driving demand for goods, and in turn keep driving demand for new labor, which can basically demanding higher salaries, but leaving low-wage earners in the dust. The Fed knows that's the kind of situation that can lead to crime and food riots.
When does it end? I'd guess mid to late 2023. The amount of rate increases may get smaller before then, but they'll still probably increase well into next year, and maybe beyond.
