Re:Nobody wants U.S. Treasury bonds
by WheatMillington on Tuesday November 28, 2023 @06:47PM
(#38453325)
I'm sorry, what? Do you have any idea whatsoever you're talking about? Why would cash, with a nominal value of x, be worth more in in a year than cash with a nominal value of x plus some interest? Inflation aside, as this affects the value of your holdings in any case, in what universe are you better off doing nothing than earning a return?
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Re:Nobody wants U.S. Treasury bonds
by dragontamer on Tuesday November 28, 2023 @08:00PM
(#38454017)
On this point, the other guy was correct.
Cash today is worth 5.25% from a money market fund (aka: the overnight lending rate). 10Y Bonds are only 4.5% or something.
So "cash" (where "cash" means a money market fund, which is a generally accepted definition of "cash") is beating the 10Y and 30Y at the moment.
It can, it just depends. Take these hypothetical scenarios for example:
Scenario 1: Buy 10Y today, @4.5% interest.
Scenario 2: Hold that money as cash for 5 years, and then use it to buy 5Y when it's yielding 17% interest.
Scenario 2 will yield a greater ROI after the 10 years. Obviously, there's no way of knowing exactly what the future will hold (many other scenarios are also possible). It just all depends.
Perhaps the misconception is the idea that you could buy 10Y now and then sell them later for the same value if a better rate comes along, i.e, mistaking 10Y bonds for "cash" and not realising they can drop in value.