affect of twist?

[Martinghoul]

numbers?

What numbers would you like, sire?

 

[scose-no-doubt]

well htf did you get to that conclusion?

 

[Martinghoul]

well htf did you get to that conclusion?

I haven't really made any conclusions... I just said that anything is pretty much possible and cannot be excluded. Or do you mean the whole 0.89% real returns?

 

[scose-no-doubt]

Yeh I thought you meant the .89% was showing that market pricing in teh belief that 2% inflation won;t happen.

 

[TheBramble]

I’m not sure there’s that much mileage in concerning ourselves with if the 0.89% was calculated properly, how it was calculated or whether this may have included expectations on the inflation levels being hit.

There are mind-bogglingly large numbers of financial models of equally mind-boggling complexity that will give you all sorts of wonderful stuff that many people seem to live or die by. And to be fair, if everybody is being measured and controlled by these data and your livelihood is linked to your performance against these same bods using this data, then what else are you going to do? Currently, any Hedge Fund that’s lost less than 15% so far this year is considered to be doing quite well.

So in reality, all these wonderful numbers and models mean absolutely Jack Sh!t. But there development and utilisation are an industry in themselves.

If any of it gave anyone a real handle on the situation then the Twist (V2) would never have been required.

As it is, it’ll likely have as much impact as the previous one – Zero.

 

[scose-no-doubt]

As it is, it’ll likely have as much impact as the previous one – Zero.

Impact has already been felt though, innit?

 

[Martinghoul]

Yeh I thought you meant the .89% was showing that market pricing in teh belief that 2% inflation won;t happen.

0.89% is just 2.89%, which is the yield on a 30y nominal UST (annualized, obv) minus 2% inflation. This is just the Fisher equation that can be given as "real yield = nominal yield - inflation". So this isn't really any model or anything to do with mkt pricing.

 

[scose-no-doubt]

It's teh 2% that's confusing me. from whence came it?

 

[TheBramble]

Impact has already been felt though, innit?

The intent of the Twist now, as before, is to keep long-term interest rates down and all the ‘good’ things that apparently enables. Except we already had historically low interest rates and have had for some time and it hasn’t helped at all as there are other factors at work.

If by impact you mean the current ‘turmoil in the markets’ (LOL) that was already happening. There have been other weeks with similarly rewarding/unrewarding volatility where no such high-level interventions have occurred.

Waste of time looking for the actual real cause as I doubt anyone anywhere has the full picture or even possibly could have it. The media tend to grab the nearest ‘event’ and claim that is the ‘cause’, even if the event post-dates the apparent ‘effect’ and nobody ever seems the slightest bothered by the paradox.

 

[scose-no-doubt]

No I meant that expectations were already there and so positioning probably took place prior to announcement.

 

[TheBramble]

Are you saying that speculative positioning prior to the announcement of Twist (V2) probably took place? If so, of course. But the resultant impact on the markets was not the INTENT of the ‘initiative’ that was a by-product.

The intent is longer term and related to expectations of facilitating expansion and growth.

 

[libertas]

It's teh 2% that's confusing me. from whence came it?

"Central banks of the world over many years now have established a great deal of credibility for inflation rates in the vicinity of about 2%. And it would be a very risky transition if we in any way reduced our commitment to ... an approximate 2% inflation target," he said, according to Dow Jones Newswires. Bernanke, speaking in a question-and-answer session following a speech at the Bank of Japan, May 5th 2010

This is where the 2% figure came from. I'm not suggesting this will be the average inflation rate over the next 30 years but what Bernanke desired it to be. I therefore assumed a .89% return on the 30 year.

 

[scose-no-doubt]

oh lol. ok.

 

[Martinghoul]

It's teh 2% that's confusing me. from whence came it?

As libertas says, it's the (semi)official inflation target for most Western CBs out there, including the Fed.

 

[scose-no-doubt]

As libertas says, it's the (semi)official inflation target for most Western CBs out there, including the Fed.

That's never on point though, kidder.

 

[Martinghoul]

That's never on point though, kidder.

Well, that's just the way this cookie crumbles, peabody...