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Comment by thisisit | Hacker News Reader

Tiny bit of data? I can only say this - check out some older NFP releases and see what happens when there is a huge difference between the expected and actual data. During Greenspan's era there was another data point which was monitored a lot. I forgot the exact data point name.

In the current NFP consensus on this one was 181k while the report was 200k which is nearly 10% variation from the expected value.

As for treasuries, the upward movement is expected. It is considered to be a safe asset in the sense that there is a fixed return. Equities on the other hand are considered risky assets. So, for the most part they are negatively correlated. Markets are down, then bonds should go up.

That said, markets and crowd wisdom are not perfect and don't always reflect all the information correctly all the time.

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I hear you, but it's still interesting to think that high inflation expectations means both bonds and stocks down, but much higher inflation expectations means stocks crash and therefore bonds is safe so they go up :-) Put differently, I could also argue that bonds up is irrational given higher inflation expectations and this move up will be short lived. Time to short bonds ;-)

Will check out older NFP, thanks.

> Tiny bit of data?

I phrased it all wrong. What I wanted to convey is a lot of data points slightly pointing in one direction, none of which move anything individually, but at some point people realize that everything in pointing in a downwards direction, and get scared.

Anyway, thanks for the chat.

Taking that line of thought further, that means if bonds and stocks are both down, then cash is a good place to be...when inflation is up? Investing is hard.

That's right, because cash is money now, bonds is money later. If inflation is high I'd rather have $100 now than $100 later.

Of course, real decisions are made on figures. The actual way of making this decision would be to compare the bond yield with the expected inflation. If expected inflation is higher than the bonds yields I'm going to sell my bonds for cash and so will a lot of people, so the bonds price will drop and the yields will raise until a point where they're attractive again.

But yes, it is hard.

Projecting bonds being down/increasing yields isnt surprising in any way in inflationary environment. The harder thing to get around is stocks, which should outperform cash in an inflationary environment. To me it just shows that there are many dependencies, and it is not always simple to project an outcome or response for a given class to an event.

There are gold, FOREX, and commodities. Also, there's a huge difference between high inflation and increasing inflation.

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