low interest rates short/long term debt

^ Yeah, if you think your smarter than the yield curve on treasuries, you’ve got some big stones or a lack of perspective.

Supply and demand.

It’s simillar to buying stocks and having expectations on return. This is what drives the demand. Supply is responsible for the friction of that demand. And demand is responsible for the yield on that supply. In effect, they eventually reach a state of equlibrium, until new information is introduced and expecations are shifted, resetting the process.

You are missing my point, probably because I wasn’t clear. You are starting at Day 0 when rates are moving. But Day 0 isn’t when rates are moving, it’s today. It could take 3 years for rates to spike up, or it could take two days. Your view on this impacts where on the yield curve. Going short in the yield curve just because rates will go up is not a useful explanation. It depends how long until rates move, no matter what degree.

Your crystal ball is far clearer than mine if you want to make serious bets on “when interest rates will spike.”

So you are saying every investor should hold overnight funds? If not, why? Your answer is going to have some componenet of an expectation of raising rates.

The money market has short durations, it doesn’t really matter, the risk and yield won’t net you much profit unless you’re well funded or highly leveraged.

How does one highly leverage the money market???

^ Short 15 day bills, long 30 day bills. :wink: Just some typical MrSmart street smart wisdom.

Figure it out.

Like any model, the term structure (aka yield curve) is not an accurate model. So why rely on it?