Money & Economics
- Thread starter bigredfish
- Start date
Something I knew nothing about but have learned a bit on since the beginning of the ill -fated war Trump started, -
Crack Spreads.
Now before Arjun shows up..
Grok
Diesel crack spread is the price difference between diesel (or heating oil) futures and crude oil. It shows the margin refiners earn turning crude into diesel. At a record $102, it signals extreme diesel shortages from Middle East/Ukraine disruptions and low inventories. The post means industry may slow sharply or consumers face major cost spikes in fuel, trucking, farming, and goods.
Crack Spreads.
Now before Arjun shows up..
Grok
Diesel crack spread is the price difference between diesel (or heating oil) futures and crude oil. It shows the margin refiners earn turning crude into diesel. At a record $102, it signals extreme diesel shortages from Middle East/Ukraine disruptions and low inventories. The post means industry may slow sharply or consumers face major cost spikes in fuel, trucking, farming, and goods.
I feel like in the next 6 months or so more people will magically become more interested in the economy , and food, and gas, and Costco toilet paper… just a hunch
I'll be happy to! According to our president we're in the best economy the nation has ever seen, and we're entering a golden age.
Treasury Bonds- info you should understand
I'm the 30 year US Treasury bond, the long term debt security issued by the American government.
Right now, my yield has climbed to 5.3%, reaching its highest level since June 2007.
You might see a simple figure on a screen, but to understand what that percentage actually means, you have to look at what I do to the world.
Yield and price always move in opposite directions.
When my yield jumps up to 5.3%, it means my market price has plummeted.
Investors are selling me off, demanding a much higher rate of return before they'll agree to lend their cash to the government for three decades.
People often confuse me with short term interest rates set by the Federal Reserve.
They assume that if consumer spending slows down or retail sales drop, my yield ought to fall.
But I don't respond to brief economic blips.
Short term bonds care about what the central bank does at its next meeting.
I care about what happens over the next 30 years.
When you buy me, you're locking away your capital until 2056.
If you expect inflation to erode your money over those decades, or if you expect the government to flood the financial system with paper, you'll refuse to buy me unless I pay you a heavy reward.
That reward is my yield, and right now, it is surging.
Look at why my price is falling.
The main engine behind my rising yield is the sheer scale of American government borrowing.
Total federal debt is fast approaching US40 trillion.
To fund vast budget deficits, the US Treasury has to issue hundreds of billions of dollars in fresh debt.
Just recently, the government auctioned off US25 billion of me in a single sale.
When supply floods the market like that, buyers get selective.
Investors look at the mountain of paper coming down the pipeline and demand higher yields to absorb it.
I'm also competing for capital in a crowded room.
Big technology companies are issuing massive amounts of corporate bonds to fund artificial intelligence infrastructure, pulling from the exact same global pool of money.
At the same time, inflation risks refuse to fade.
Energy costs are rising again, with crude oil climbing past US$90 a barrel as tensions flare in the Middle East and threaten key shipping lanes.
Expensive oil trickles into almost every consumer good.
If energy stays high, inflation remains sticky, and the purchasing power of the cash I pay you back in 30 years shrinks.
That is why buyers insist on a higher term premium, a built in cushion against future price spikes.
This creates a dangerous feedback loop inside me.
Because my yield has reached 5.3%, borrowing has become far more expensive for the government that creates me.
America's annual interest expense on its debt has already crossed US$1 trillion.
As older, lower yield bonds mature, the Treasury must replace them by issuing new bonds like me at today's elevated rates.
That higher interest burden expands the fiscal deficit even further.
A larger deficit forces the government to issue even more bonds, which pushes my yield higher still.
I'm trapped in a cycle where high yields generate the very fiscal pressure that keeps yields high.
Because I'm the foundational benchmark for long term borrowing, my movement spreads throughout the whole economy.
I set the baseline cost of capital.
When my yield rises to 5.3%, mortgage rates for home buyers increase, and corporate loan costs rise.
Equity markets feel the pressure immediately.
Investors ask why they should take on risk in the stock market when they can lock in over 5% virtually risk free by holding me.
Valuations drop because future corporate earnings are discounted at a much higher rate.
I'm not just a paper instrument sitting in a digital ledger.
I'm the price of time, risk, and fiscal reality for the largest economy in the world.
My surge to 5.3% isn't an accident.
It is the market's real time verdict on 30 years of expanding debt, persistent inflation, and endless demands for capital. As long as those structural forces press down on me, I'll keep forcing the rest of global finance to reprice around my we
I'm the 30 year US Treasury bond, the long term debt security issued by the American government.
Right now, my yield has climbed to 5.3%, reaching its highest level since June 2007.
You might see a simple figure on a screen, but to understand what that percentage actually means, you have to look at what I do to the world.
Yield and price always move in opposite directions.
When my yield jumps up to 5.3%, it means my market price has plummeted.
Investors are selling me off, demanding a much higher rate of return before they'll agree to lend their cash to the government for three decades.
People often confuse me with short term interest rates set by the Federal Reserve.
They assume that if consumer spending slows down or retail sales drop, my yield ought to fall.
But I don't respond to brief economic blips.
Short term bonds care about what the central bank does at its next meeting.
I care about what happens over the next 30 years.
When you buy me, you're locking away your capital until 2056.
If you expect inflation to erode your money over those decades, or if you expect the government to flood the financial system with paper, you'll refuse to buy me unless I pay you a heavy reward.
That reward is my yield, and right now, it is surging.
Look at why my price is falling.
The main engine behind my rising yield is the sheer scale of American government borrowing.
Total federal debt is fast approaching US40 trillion.
To fund vast budget deficits, the US Treasury has to issue hundreds of billions of dollars in fresh debt.
Just recently, the government auctioned off US25 billion of me in a single sale.
When supply floods the market like that, buyers get selective.
Investors look at the mountain of paper coming down the pipeline and demand higher yields to absorb it.
I'm also competing for capital in a crowded room.
Big technology companies are issuing massive amounts of corporate bonds to fund artificial intelligence infrastructure, pulling from the exact same global pool of money.
At the same time, inflation risks refuse to fade.
Energy costs are rising again, with crude oil climbing past US$90 a barrel as tensions flare in the Middle East and threaten key shipping lanes.
Expensive oil trickles into almost every consumer good.
If energy stays high, inflation remains sticky, and the purchasing power of the cash I pay you back in 30 years shrinks.
That is why buyers insist on a higher term premium, a built in cushion against future price spikes.
This creates a dangerous feedback loop inside me.
Because my yield has reached 5.3%, borrowing has become far more expensive for the government that creates me.
America's annual interest expense on its debt has already crossed US$1 trillion.
As older, lower yield bonds mature, the Treasury must replace them by issuing new bonds like me at today's elevated rates.
That higher interest burden expands the fiscal deficit even further.
A larger deficit forces the government to issue even more bonds, which pushes my yield higher still.
I'm trapped in a cycle where high yields generate the very fiscal pressure that keeps yields high.
Because I'm the foundational benchmark for long term borrowing, my movement spreads throughout the whole economy.
I set the baseline cost of capital.
When my yield rises to 5.3%, mortgage rates for home buyers increase, and corporate loan costs rise.
Equity markets feel the pressure immediately.
Investors ask why they should take on risk in the stock market when they can lock in over 5% virtually risk free by holding me.
Valuations drop because future corporate earnings are discounted at a much higher rate.
I'm not just a paper instrument sitting in a digital ledger.
I'm the price of time, risk, and fiscal reality for the largest economy in the world.
My surge to 5.3% isn't an accident.
It is the market's real time verdict on 30 years of expanding debt, persistent inflation, and endless demands for capital. As long as those structural forces press down on me, I'll keep forcing the rest of global finance to reprice around my we