Eurodollar University BREAKING: Something BIG Just Snapped in the Bond Market
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Aug 29, 2025 Two-year Treasury yields hit a new low, reshaping the yield curve and suggesting future interest rate trends. The discussion critiques common economic misconceptions, particularly regarding the Fed's approach to inflation. Innovative investment strategies for gold, allowing it to earn interest, are introduced. The dynamics between the bond market and the Fed highlight market independence, raising questions about the safety and demand for treasuries in the current climate.
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Two-Year Yields Signal Curve Reshape
- Two-year Treasury yields hit a near-year low, signaling a major reshaping of the yield curve.
- Jeff Snider argues this reshaping explains long-term rate moves more than Jackson Hole commentary.
Middle Curve Prices A Zero-Rate Future
- The market views the middle of the curve as pricing a path to much lower rates, akin to zero-rate eras.
- Goldman Sachs observed five-year Treasuries are historically rich relative to other maturities, reflecting that expectation.
Short Rates Fall As Labor Weakness Looms
- Falling two-year and T-bill rates reflect growing market conviction the Fed will cut as labor weakens.
- Snider says rate cuts are a reflexive response to deteriorating labor conditions, not inflation fears.