TradingView
konhow
Mar 1, 2024 6:26 AM

Why Central Banks Buying Gold & Institutions Hedging the Yields? Education

Micro 2-Year Yield FuturesCBOT

Description

While many of us celebrate the stock markets reaching new highs, central banks worldwide are actively purchasing gold, and institutions are hedging into treasuries and yields.

Interest rates are determined by the central banks whereas Yields are determined by the investors.

If you choose to lend or borrow money over a longer period, such as 10 or 30 years, you would typically expect to earn or pay more interest for this extended duration loan contract. However, currently, we are witnessing an inversion of this relationship, known as the inverted yield curve, where borrowers are required to pay higher interest on their short-term loans, such as the 2-year yield we're observing, compared to their longer-term borrowing.

2 Year Yield Futures
Ticker: 2YY
Minimum fluctuation:
0.001 Index points (1/10th basis point per annum) = $1.00

Disclaimer:
• What presented here is not a recommendation, please consult your licensed broker.
• Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.


Comments
TradingView
Very informative video, well presented. Please make more of these!
This totally deserves the selection for Editors' Picks, congrats! 🙌🏽
financialfreedomgoals101
thank you for sharing Valuable information 😁
konhow
@financialfreedomgoals101, I am glad you find it useful. Thank you!
Chicama
Because it’s going to crash (at some point)
konhow
@Chicama, The million dollar question is always 'when will that be?' Stay tuned for the upcoming tutorial. When it happens, we hope to be able to identify it at its beginning stage. The demand for gold and yields are the warning signs. Keep watching.
benzapp
Libertarians never make money and all are poor.
Amirof
Fantastic! Thank you. When do you think smart money would ideally shift towards Russell 2000?
konhow
@Amirof, I believe they have done so and still doing... Take note Nasdaq, S&P and Dow Jones have broken above their previous high, but Russell is still 20% away from its previous high.
Amirof
Appreciate your insight🍻
Jess3450
By hedging their yields, institutions can protect themselves against these losses by entering into derivative contracts that pay off when interest rates rise.
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