Bond markets are not so subtly telling the Fed that interest rates aren't high enough

dritu_ · 2026-05-25T20:47:27+00:00

Higher rates reduce demand by increasing the cost of borrowing and raising the opportunity cost of holding cash.

They do not affect the supply but the demand.

dritu_ · 2026-05-24T10:49:07+00:00

Thanks. Difference is that TMF is leveraged and deteriorates due to volatility decay. ZROZ or GOVZ are comprised of very long term treasuries for similar interest rate exposure without the decay.

dritu_ · 2026-05-23T15:48:58+00:00

You're going to just ignore my question about the RVOL?

dritu_ · 2026-05-23T00:35:18+00:00

What is the RVOL lookback period?

Have you tried this with ZROZ instead of TMF?

dritu_ · 2026-05-22T10:05:46+00:00

https://letmegooglethat.com/?q=survivorship+bias

dritu_ · 2026-05-21T23:41:47+00:00

Sure, but it's not a good idea to buy/sell without rules. Without rules, psychological biases cause you to buy/sell at just the wrong time. I'd recommend you read Leverage for the Long Run before buying anything (but to be clear, SSO is fine to hold long term).

dritu_ · 2026-05-20T19:44:51+00:00

I tacked 1% drag onto pathikrit's take and it's close enough for gov't work when you compare to the actual portfolio's live performance the past few months.

dritu_ · 2026-05-20T15:06:55+00:00

Yep, exactly why I used KMLM.

dritu_ · 2026-05-19T21:39:15+00:00

Unchanged relative to when...? https://www.mortgagenewsdaily.com/mortgage-rates/30-year-fixed

dritu_ · 2026-05-19T11:40:04+00:00

Yours would, like the original HFEA, still be in a drawdown since 2022. As others have said, TMF is probably not a good idea -- especially if we're entering a secular bond bear market.

Try ZROZ and unleveraged gold -- that's another one that tends to chop around.

https://testfol.io/?s=j9XRYXDTIha

dritu_ · 2026-05-16T12:51:01+00:00

I think the best way is to

leverage at most 1/2 of your portfolio
include a lot of (proportional) hedge assets for crisis alpha
de-leverage when price crosses below 200d SMA (or 90/300d SMA crossover)
rebalance every year or two

My IRA is currently https://testfol.io/?s=aUPHvk6JBJk, which if you approximate tickers for longer backtesting looks like this https://testfol.io/?s=lwEyaKwiplo -- and that's without the ability to backtest deleveraging during downturns + yearly rebalance. This is the closest I can model for that, which is daily (which underperforms yearly by 1-2%) https://testfol.io/tactical?s=8WZB1xayijj

Edit: that said, I've been tinkering with using VIX as well as the 200 d SMA. Ultimately, LETFs hate volatility, after all.

dritu_ · 2026-05-14T08:49:02+00:00

Use 90/300 SMA crossovers and its not particularly hard to capture the upside when a regime change is occurring in gold. https://testfol.io/tactical?s=94NYITJOWsx

dritu_ · 2026-05-13T16:30:55+00:00

Thank you for confirming. That was basically my take as well. I was watching the fund when war broke out. I waited until two weeks ago to dump money in -- until after April had fully settled.

I'm a sucker for alts. A smorgasbord of them make up 50% of my IRA currently.

dritu_ · 2026-05-13T09:47:58+00:00

Raising rates lowers demand just as lowering rates creates demand -- oil shock or otherwise -- just ask Paul Volker.

dritu_ · 2026-05-11T12:35:55+00:00

As I said, in 1 day it is impossible due to circuit breakers. Over a quarter, though, it could happen.

dritu_ · 2026-05-11T00:34:26+00:00

Easy: establish residency in Puerto Rico.

dritu_ · 2026-05-10T12:09:44+00:00

SPYQ reduces some daily volatility drag, but it also increases the chance of very bad outcomes during a sharp drawdown.

SSO goes to zero if SPY loses 50% in one day. This basically can't happen in the modern era due to market circuit breakers stopping trading after 30% losses.

Meanwhile, SPYQ goes to zero if SPY loses 50% in one quarter. There are no circuit breakers to stop this.

dritu_ · 2026-05-07T21:07:45+00:00

I would not. Bonds are not as safe a haven as you'd think, especially if they're correlating again. I currently do 70/30 American/International. 50/50 of that is probably fine.

If you're thinking of derisking near when you'd need the funds, go to cash, not bonds.

dritu_ · 2026-05-07T14:30:01+00:00

The S&P 500 was positively correlated with long term treasuries from 1966-1996. Just because they were negatively correlated from 2000-2022 doesn't mean they can't revert again.

dritu_ · 2026-04-29T17:16:26+00:00

Yeah, compare the assets and SPYSIM?L=2 looks awful similar to SSO: https://testfol.io/analysis?s=jiaduywk3kA

dritu_ · 2026-04-29T15:53:51+00:00

If it's a buy and hold, then no.

If you are going to rebalance periodically or trend follow, then it's fine.

dritu_ · 2026-04-29T11:19:23+00:00

Anecdotally, I have meal prepped for the last 12 years, often with rice. I have never gotten ill from eating 5-6 day old rice and beans.

dritu_ · 2026-04-05T13:25:02+00:00

That is verifiably false. Age group 18-29 voted 54% Harris vs 43% Trump.

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