For asymmetric investment returns, when examining the yields on the long end of the yield curve, it's essential to consider three critical factors: growth expectations, inflation expectations, and term premium. Each of these elements plays a significant role in determining the equilibrium yield for long-term bonds.
Despite the Federal Reserve (Fed) lowering interest rates, the ICE US Treasury 20+ Year Index has declined -7.2% from its recent peak a few weeks ago.
Today, the VIX futures term structure offers some intriguing signals, particularly with its current shape and slope. Let’s dive into what the term structure is telling us and what it might mean for traders and investors.
What the Fear & Greed Index is Telling Us Today—and How It Can Be Used for Tactical Trading and Risk Management
As Hurricane Milton approaches Tampa Bay, it’s crucial to break free from the false belief that long stretches without an event mean safety. While it’s comforting to think that the past protects us, probability tells a different story. Each year carries its own risk, and the fact that Tampa Bay hasn’t had a direct hit in over a century doesn’t mean one isn’t coming.
Probability theory is a powerful tool that helps us understand the likelihood of events. However, when it comes to managing risks in real life—whether in finance, business, or disaster preparedness—simply understanding the probabilities of events isn't enough. Robust risk management often focuses on preparing for worst-case scenarios, not just the most likely ones. Here’s why pure probability sometimes conflicts with smart risk management.