Dear Sir, i have a not-so-clever question, agree on that in [6:20]th min the right side of curve will have lower YTM when investors "pile-in", but as central Banks also cuts interest rate, i think the short term part of the curve will be lowered too, the left side of the curve. I can't logically imagine "an inverted yield curve".
He is saying that 'ahead' of the central banks actually cutting the benchmark rates (e.g. Feds fund rate in the case of US), which was still at a high level, the market anticipates such move, by purchasing the bonds in the longer end of the yield curve, e.g. 10 or 30-year bonds, driving up the price of the bonds and lower the yield in the long end. The reason investors do that is because bonds in the longer end of the yield curve have a higher duration, or greater sensitivity/price appreciation when the yield drops.
The short duration part of the yield curve is not set by the free market, but is manipulated by policy makers. What is the unintended consequence of this manipulation? If the short term duration is rigged, what does that say about how trustworthy and interpretation of the longer durations would be? Wouldn't manipulation on one end have some indirect effect on the other side of the graph?
Here's a link to Tim Bennett's earlier video on this same topic of the bond-yield curve, from when he worked for MoneyWeek rather than for Killik & Co.: ua-cam.com/video/3b69Ax5m7qg/v-deo.html&index=456 Personally, I feel Bennett's Moneyweek series is quite better than his Killik & Co. - the white-board style of the former, as well as the more tempered pacing, feel to be more helpful. (Having said that, in this instance, the present segment - Killik & Co. - I believe is excellent.)
Thanks for commenting (and working out where I have moved to!). Both styles have their pros and cons and it is always useful to get feedback. Hope you carry on enjoying the series. Tim
Wow, thank you for reply, Mr. Bennett - it is a pleasure to talk to you. I began watching your videos several months ago, as I was leaving college, having gained the awareness of how absently prepared my formal education had left me in approaching financial or monetary matters. I have learned a great deal from your video segments - in particular those you recorded for Moneyweek, but also the contributions you continue to make, with Killik Co. - and I am fortunate to find the opportunity to thank you directly for your efforts in designing these. I know I am one among an uncountable sum of Internet-surfers and UA-cam-adherents - past to future - to have been edified by your knowledge, in the company of your natural ability as a teacher, and you have our sincerest gratitude.
what a banger of a video
Well explained and summarized, thank you! Helped me get back into topic.
this is amazing. THANK YOU.
Liked it
Great value, thank u
Thank you sir
Dear Sir, i have a not-so-clever question, agree on that in [6:20]th min the right side of curve will have lower YTM when investors "pile-in", but as central Banks also cuts interest rate, i think the short term part of the curve will be lowered too, the left side of the curve. I can't logically imagine "an inverted yield curve".
He is saying that 'ahead' of the central banks actually cutting the benchmark rates (e.g. Feds fund rate in the case of US), which was still at a high level, the market anticipates such move, by purchasing the bonds in the longer end of the yield curve, e.g. 10 or 30-year bonds, driving up the price of the bonds and lower the yield in the long end.
The reason investors do that is because bonds in the longer end of the yield curve have a higher duration, or greater sensitivity/price appreciation when the yield drops.
The short duration part of the yield curve is not set by the free market, but is manipulated by policy makers. What is the unintended consequence of this manipulation? If the short term duration is rigged, what does that say about how trustworthy and interpretation of the longer durations would be? Wouldn't manipulation on one end have some indirect effect on the other side of the graph?
while bond logic says price rises and yields fall, QE doesnt cause yields to drop infact the exact opposite
Here's a link to Tim Bennett's earlier video on this same topic of the bond-yield curve, from when he worked for MoneyWeek rather than for Killik & Co.:
ua-cam.com/video/3b69Ax5m7qg/v-deo.html&index=456
Personally, I feel Bennett's Moneyweek series is quite better than his Killik & Co. - the white-board style of the former, as well as the more tempered pacing, feel to be more helpful. (Having said that, in this instance, the present segment - Killik & Co. - I believe is excellent.)
Thanks for commenting (and working out where I have moved to!). Both styles have their pros and cons and it is always useful to get feedback. Hope you carry on enjoying the series. Tim
Wow, thank you for reply, Mr. Bennett - it is a pleasure to talk to you. I began watching your videos several months ago, as I was leaving college, having gained the awareness of how absently prepared my formal education had left me in approaching financial or monetary matters.
I have learned a great deal from your video segments - in particular those you recorded for Moneyweek, but also the contributions you continue to make, with Killik Co. - and I am fortunate to find the opportunity to thank you directly for your efforts in designing these. I know I am one among an uncountable sum of Internet-surfers and UA-cam-adherents - past to future - to have been edified by your knowledge, in the company of your natural ability as a teacher, and you have our sincerest gratitude.