For various reasons I think yields on US government bonds (longer out) should be much higher than they currently are. Now, does anybody know if there is some good research on the www about the “fair value” of US Treasuries? A model or something that could help me figure out the equilibrium price of USTs. The www should be full of it, but I just can’t seem to find anything valuable. Drives me nuts.
http://en.wikipedia.org/wiki/Fair_value But here’s some free advice: don’t go broadcasting (on public bboards) the fact that treasuries are overpriced or you’ll soon be unable to monetize your insight.
DarienHacker Wrote: ------------------------------------------------------- > http://en.wikipedia.org/wiki/Fair_value > > But here’s some free advice: don’t go > broadcasting (on public bboards) the fact that > treasuries are overpriced or you’ll soon be unable > to monetize your insight. You’re right. Some guy on a message board is going to move a market that is how many trillions of dollars?
DH sure is confident in Wikipedia.
Sorry, was attempting a bit of humor. It’s of course nonsense to say that the fair value of a commodity is different from the market-clearing price in arms-length transactions; in otherwords, “bonds aren’t trading at fair price” is an oxymoron. Even if that weren’t the case, if D-B wants to monetize her view, she needs to convince the market to move. That’s an uphill struggle, as you point out. HSA: I actually didn’t read the article I linked – is it in error?
For the record DH, I thought your post was funny.
Be careful advertising your opinions on bulletin boards… you could be accused of “pump and dump”. 
Thanks for your input, folks, but your answers are way off where I was heading. My apologies for not making my point clear enough. I will rephrase my question at some later date. As with making my opinion on US Treasuries “public”, I wish I could make that market move a few pips with the sheer power of my words. But somehow I got the feeling that this is not going to happen. Good riddance, DB.
I’m surprised that you think the internet should be full of quality government bond valuation models. Generally, my opinion would be that anything worth reading likely involved a significant amount of work by intelligent people, and therefore is unlikely to be available for free on the web.
So you are saying intelligent people don’t use the internet. Interesting…
A while ago I shorted long bonds via the ishares and lost $2000. I think they’re too expensive, too, but it’s crazy to mess with the stupid people buying them cuz clearly they’re not investors… the buyers are pension fund managers, Chinese gubmint officials and maybe some quantitative geeks. They don’t *think* normally.
Those darned non-normal thinking distributions!