I'm concerned not due to any potential crash but because of the implied strain to household and many medium to small business finances and borrowing costs, in an economy that was already K shaped and bifurcating... plus politically worried this is going to be used as an excuse for significant cuts to Social Security, Medicare, Medicaid (at a time where we have record corporate profits in the US, record concentration of wealth at the top, making these implied cuts a giant slap in the face for working Americans).
The 10 year yield is generally a benchmark for lending across a variety of avenues across the entire economy, including mortgage rates and auto loans, but also business borrowing, especially mid and small businesses, and can eat into ,(reduce) capital investments and profits.
Consider it a cost/price increase, especially at a time when costs / prices are already high and many non tech sectors (such as consumer goods and retail) have relatively low margins (ex. P&G), not to mention underlying household finances.
What worries me is that the only parts of the economy doing well are doing so off the back of an obviously unsustainable AI bubble. How long until higher borrowing costs pop that and we are left with an economy where every sector is down from where it was a decade ago
Given the debt for ai raising is higher than treasury rates and basically competing for attention from the rich who can invest, I think we can see that soon. The WTO already admitted they failed on the goods side reporting and it was up around 19% with 55% of new growth being AI related. That shift where the bonds aren't selected is already happening now.
I don't have a crystal ball (unfortunately), but my best guess for timeline is that this winter is when things are going to begin. Supply restrictions and empty reserves heading right into a winter that should be worse than historic averages for climate reasons is a recipe for crazy price jumps and emergency actions by localities. Imagine what happens to investor confidence if local governments have to start cutting off already powered data centers to prevent blackouts for residential areas.
Oh that is definitely the case. Google had to hide at all levels what it was doing in The Dalles, Oregon. The data center infrastructure is already competing for energy. It is somewhere between 20-25% of total electricity in Dublin meaning schools and shit dont get built for data centers.
I dont think you need a crystal ball to see it as overmanufacted and breaking along any of the atressed points.
Yeah I just listened to a good episode of the Better Offline podcast with Paul Kedrosky guest appearing and he went fairly deep on what your talking about here.
It really looks like we’re witnessing a historically bad economic timebomb in progress. Whenever this falters it’s gonna take so many sectors of the international economy with it. The people involved should be held criminally liable.
I was thinking about that. I can't speak for other parts of the US or the world, but the one thing I've noticed in North Carolina is that people who aren't the gentry don't count but are used for their votes. They are supposed to service or suck up to them much like a cheap whore would a John, but not look like a streetwalker when they do - and be glad for the crumbs they get and look down on those who don't have that
You’re not wrong. I live in the south and have known some people in the past who were absolutely in the top 1% of earners. Witnessing their attitudes towards working class people was like getting a tiny sample of what feudalism looked like. And even then, those rich people I knew were of the Mark Cuban flavor of wealthy, where they thought “Oh, no. It’s the other rich people who cause all of the problems!”
Republicans know that they can redirect the anger of high prices towards women and minorities. Republicans are rewarded for doing a shitty job because they pander to the dumbest religious people in the country. We are not allowed to talk about it or they have tantrums and continue voting for nazis.
10 yr can be used for a measurement of multiple loan rates, including car loans and mortgages I thought. I have read the 5 year is considered a better benchmark for car loans specifically.
(For Auto) The 5-year 100% yes, the 10-year definitely not
Think of it from the lenders POV. You have $30k to do something with. You could either lend it or invest it. If you lend it, ask, what's the average time it takes for you to get your money back? The weighted average life of car loans is anywhere from 3-5 years on average. So you benchmark the rate on your auto loan to the rate you could get just investing in a 3 year or 5 year treasury.
You would never compare the return to what you get on a 10-year treasury because you'd never be recovering your auto loan over 10 years
Mortgages on the other hand look at the 10-year because thats the average life of the loan. Even 30-year mortgages, because over that span there is not only lots of prepayment opportunities but there's also refinance opportunities where institutions dont often see the full 30-year repayment term
Oh! okay I definitely am a novice when it comes to all this economic data. I'm trying to get better with understanding it all. Thank you for the explanation!
Sure, don't think that changes anything in this particular discussion though. The headline was about how high the 10-year is now, and the comment was about how that (incorrectly) affects auto rates.
The 5 year crossed 4.95 a week ago, and the last time it did that was just 2 years ago, and its only up ~10bp from there. The 10 year on the other hand crossed the 4.98 it was at 2 years ago also, but now it's 30 bp above that. Completely different magnitude and reasons why
Even if the term is 10 years the weighted average life of that loan will still be considerably less. And its such a small segment of lending you wouldn't consider it in general conversation on the topic
As someone who is in car lending, You are 100% wrong. Most new car loans that are getting approved these days from banks and credit unions are 6-8 year loans because that's the only way people can afford a new vehicle.
As someone who is part of a credit union consumer pricing committee and reports to the ALCO, you are 100% wrong.
Auto lenders push for 6-8 year car loans because theyre predatory to financially illiterate borrowers to try and convince them to buy something they otherwise couldn't afford by making the monthly payment look more attractive.
And even IF your hypothesis that "most new loans" are 6-8 years, it still wouldn't price off the 10 year treasury, the weighted average life of those loans is still at 5 years
It might just be me, but I feel like we've been seeing this exact same news repeated multiple times over the last two weeks or so tbh. And heck, with the way things are going, we probably are going to see more of these articles again for a while.
People have gotten numb to it but I think the most recent headlines are emphasizing that we're now back to 2002. Which means we've eclipsed the worst of the 2007/2008 crisis.
This is just one indicator, but its a big one and to be out ahead of a huge financial crisis ajd it not be the top day to day story is pretty indicative of how chaotic things are right now.
It seems hard to imagine but if the US continues shitting the bed fiscally, diplomatically, militarily, and economically, softening investor demand will eventually push rates up toward banana republic levels, no?
It's not implausible that prosperity and low interest rates were... checks notes a product of a world and Status Quo Order that had successfully reduced and then eliminated trade barriers and conflict on a planetary scale. It would then follow that the collapse of that Order, alongside the collapse of easy movement of capital and labor would reduce that prosperity and force interest rates back up.
Why does that matter to you? CNBC and others love to parrot record highs in stock market levels when those happen. Why not mention that bond yields are as high as they are?
Debt/GDP in 2002 was less than half what it is today. Then, the economy was stable, it had strong entrenched alliances with every other developed nation, stable leadership, and a more than manageable debt. The only thing that was the same is we had a war hungry president. Long term bond yields had a relatively low upper limit due to the nation's standing economically and geopolitically. Today, those safeguards are gone. When I ask myself what will stop the current trend, I can't come up with a good answer. I won't be surprised if we see double digits before the current administration's term ends.
>8% will explode the economy. 10%+ would be a nuclear meltdown. Things will break before we get that high.
Things can break while bond yields continue to rise. It ALWAYS happens when a nation encounters a debt crisis it can't or won't control. This is a debt crisis The US won't control, and getting closer and closer to one it can't control.
>And Biden was war hungry? That’s the only thing you said that made me fur my eyebrows.
Oh yea the year threw me off. That makes more sense.
We are 100% headed to a meltdown. When Republicans lose trump will melt down and be even worse than he already is. 2027 & 2028 are going to be bad years.
The economy was not stable in 2002. That was the beginning of the housing bubble and right around the financial deregulation that would ultimately cause the Great Financial Crisis.
First, my comment compared 2 points in time, neither of which occurred during Biden's presidency. Second, what is your point and how does it relate to a resolution to the current situation? I'll give you a hint: it can't.
Your post said 2022, not 2002, at the time I wrote my comment.
> Second, what is your point and how does it relate to a resolution to the current situation?
That the problems causing the American Empire to crash are not just limited to a dang cheeto in the whitehouse. Trump's idiocy is accelerating them, but the problems of the US that the bond market is starting to reflect are long running and won't be changed just by voting another do-nothing Democratic neolib fossil in.
yeah buddy, you caught me, I purposefully responded to the wrong year, magically guessing by sheer chance the previously wrong year you'd put in before.
Nothing special. Rates over 5% were normal back then. Treasuries went down during the crisis because it was considered the only sure thing. Same with 9/11. When the world was scared they bought Treasuries.
Literally every day it just moves up to the next milestone. Highest yields since... When is the the highest anyway? I guess headlines after that become new all time high!
Could someone tell me where is the money going?
If the big funds (such as pension funds) aren’t buying the bonds (I mean the total volume is lower - which is leading to an increase in the rates), then where are they parking their money?
Big pension funds have an international reach so don’t have to buy US bonds when the UK 30 year is 6%.
Also, pension funds buy bonds when they have huge Defined Benefit and Annuity pension arrangements. These have shrunk a lot in recent years as people have Defined Contribution pensions now and often use Income Drawdown instead of an Annuity.
But the fact that UK's 30Y is 6% also an indication that the investors aren't wanting to buy that too? Had there been a huge migration of funds from US bonds to UK bonds, the UK rates should've gone a bit down, but that too is on a steady rise. So, doesn't that indicate that a lot of buyers are not participating in the bond market because they aren't satisfied with the current rates? If yes, then are they just letting their money remain idle in the bank accounts / buying short term bonds?
Treasuries are how the US government deficit spends - they borrow someone else’s money with interest.
The current issues are that the current government has issued so much debt in a short period of time they’ve saturated the market. The size of the bond market puts a hard cap on how much the US can deficit spend.
So it’s not necessarily that the money is going somewhere else. It’s that the US keeps trying to sell more of something and there aren’t as many buyers left.
There are other variables too like investors trusting the US less to pay them back, or fear that inflation will be persistently high and the US dollar will devalue, making those interest rates much lower effectively for an investor than they are on paper.
All that together means less people wanna buy US government debt, meaning yields go up.
When there is an expectation that yields will come down in the future. The problem is that they’re rising so much right now and nobody is proposing any measures to bring them down.
Never if the entire point is "we expect you to inflate the currency to pay for this." At that point, stocks suffer, but they start acting like real assets, which are effectively an inflation hedge.
We at the point US public debt per capita is $114,020. That's absurd and insurmountable. The fact that we're at that point and that there has been near-zero attempt to lower the accelerating deficit means something has to give and the government has no credibility.
The US likes to pretend it's Japan, but it's looking more and more like Argentina.
My understanding is that the Fed isn't printing money / creating new money right now. So, even if the US government is issuing new bonds, isn't it being done to pay off the maturing bonds? Usually, most of the maturing bondholders would buy back the new bonds. If they aren't doing so, then where are they parking their money (I am assuming it is in billions because only then would it be relevant enough to make the yield curve move significantly)? On a very zoomed-out scale, isn't the total money supply for USD constant (as of now)?
As for investors trusting the USD less, I was reading that this is the case for a lot of other developed economies. So, aren't investors avoiding long term government debt as a whole because many of them feel the yield rates aren't priced appropriately? If a lot of them are holding back from buying long term sovereign debt (across multiple economies), then where is that extra money being held? Someone commented, in their bank accounts / HYSA. I wanted to understand whether that is the case or not.
>So, even if the US government is issuing new bonds, isn't it being done to pay off the maturing bonds?
US debt has increased by 44% in just the last 5 years. And thats excluding what was done during COVID.
When a government deficit spends, that money comes from investors, who give the government money in exchange for interest payments.
If too much debt is being issued in a short period of time, it saturates the market. People are full on US debt and don’t really want that much more, so they aren’t willing to buy more unless the rate of return is even higher (yield).
Throw in some other variables like investors not trusting the quality of that product as much anymore, foreign central banks starting to move away from buying and holding US treasuries back in 2021/22, and concerns for US inflation plus currency risk making that yield much lower than the coupon rate in reality, and you have much of the current situation.
Likely it's leaving capital markets and entering the real economy. One concrete destination for this capital is AI corporate bonds; this has been cited as the big reallocation for many sovereign wealth funds (eg. the Netherlands last month). When money moves from government debt to AI bonds, those companies then spend it on datacenters, where it goes to bid up prices for electricians and computer equipment and then ends up in the income statements of NVidia, Broadcom, Micron, Samsung, SK Hynix, etc. As a result, the demand for capital increases.
Another factor is likely demographics. It's been predicted for decades that the peak of the baby boomer generation would hit age 70 (and also likely hit peak retirements) in 2025. At the same time, this is the the start of the labor career for the post-2003 baby bust. The labor force is shrinking. As more people depend upon their retirement funds to support themselves, they have to pull money out of capital markets and spend it on consumer goods. At the same time, young workers don't have spare income to invest in capital markets. As a result, the supply of capital shrinks.
If you take out all of the noise around inflation, the Fed, government bonds, government deficits, stock market bubbles, changes in the economy, etc, the natural rate of interest is set by supply and demand in the loanable funds market. When demand goes up and supply goes down, the interest rate is going to rise to equilibrate them.
You are witnessing the delayed effect of the overall shift from pensions to 401k's in the 80's and 90's. The money is being paid out to the remaining pensioners and that's it.
Government borrowing costs rose around the world on Thursday, continuing a months-long trend as investors express concerns over a lack of political action to tackle fiscal deficits, while inflation remains sticky and interest rates rise.
Each headline says the same thing except the year is going further back. At this rate we’re going to run out of years and just say the highest ever! Man such incompetence I can’t even comprehend it.
Well my HYSA better update soon because 3.3% is no longer competitive. I’m expecting at least 4%
They're based off the FFR but subject to individual competitive pressures and corporate policy.
What happens is that the FFR effectively sets a ceiling on what the bank can pay in interest and still remain profitable. If the bank can borrow at 4%, they can afford to pay you up to 4% and still make money.
Are they actually going to pay you 4%? Well, it depends. When the Fed first hikes rates, why would they? They can just keep paying you 1%, lend to another bank at 4%, and pocket the difference. But over time, some other bank is going to realize "Hey, I can attract more deposits if I raise my interest rate to 3%, and then I will have more capital available to lend to other banks at 4%". And so on, until the rate competitively approaches the FFR.
When the FFR drops, this dynamic works in reverse, except there are some obligations the bank has that they cannot arbitrarily rewrite. So for example, if someone has a CD at 5% and it now costs the bank 4% to borrow, the bank can't just start paying 4%, because they contractually guaranteed 5%. They're going to take a loss on the CD, and so to make it up they will often drop rates on demand deposits pre-emptively when they expect the Fed will drop, as a way of getting ahead of their other obligations.
Now that the Fed is hiking again, expect the HYSA to eventually go back up, but eventually is the key word. Why pre-emptively raise their deposit rates and leave money on the table unless they're forced to by competitive pressures?
The only reliable way to match the federal funds rate is to open a brokerage account and put cash in "money market" funds that serve as abstractions over short-term US government bonds.
Someone please tell me what conditions are present to control the rise in The United States. These are the stabilizers that we have had in the past that aren't present today:
Manageable debt/GDP. At 124% and rising, that safeguard is gone.
Stable alliances with every other developed economy. Tariffs and political instability made sure that is gone. In case you never leave the country, Americans are LOATHED everywhere else.
Economic stability. It wasn't great to begin with, but AI has disrupted both the lending and jobs markets.
Growing working age population.
Stable government and military leadership. Threatening allies, enacting absurd tariffs, extrajudicial killing, deportations to torture prisons, a military operation to seize oil in Venezuela, and a forever war everyone knew would skyrocket oil prices because Netanyahu said so. No nation sees The United States as anything but UNSTABLE.
In every other crises, it was nearly certain the government could and would act with prudence (even if that was obscene corporate bailouts) to ensure economic crisis didn't result in economic ruin. Now, I can't even fathom a way in which the government COULD stem an economic crisis. What's worse, is I'm certain the current leadership would use it as an unfettered grift which would have the opposite impact.
I've been against the doomerism since I can remember. At least I was until now. There is just nothing I can see that will stop this collapse.
There is some mechanics at play that made this somewhat inevitable from a credit structure standpoint.
The longer end of the yield curve is chalked full of trillions of dollars of underwater and negative real yielding bonds. Commercial banks, insurance companies, private and public pensions, etc have them in “held to maturity accounts” so they don’t have to mark to market. And if they did they would be immediately underwater. See Silicon Valley Bank.
What people called glorious credit expansion and soverign and high quality corporate ballast at the long end is now dead weight. Just taking up the volume at the long end. It’s a shallow pool of liquidity filled with boulders and silt.
The short end, 1-3 years maybe a bit longer had the duration roll off the booms and is fairly liquid. It is a deep and liquid end of the pool.
So it takes very little drop in demand at the long end, a shift to shorter duration, cash, and cash like instruments to drive the long end up fast, and the short end absorb it without driving up credit at the short end nearly as much.
The only way to clear it is to:
Wait 10-20 years for all the ZIRP era debt to roll off.
Or have the Fed go in and put them on their books at or near par value.
Some black swan or major event somehow causes a flight to long duration safety (I have no idea what that might be).
Edit: There are more complex solutions like the Fed and Treasury creating special purpose vehicles or the like to load all that onto, but it would take stretching the rules and laws right to the breaking point.
I was talking the political damage and add on impacts to the economy through a lack of a rules based international order. Who wants to invest money in doing business with the US when they constantly change the rules based on a tweet?
And the US is perfectly content to elect another president who will do the same thing in the future.
Oh look a Democratic landslide is coming, bitch, winning a bunch of races 52-48 is not a landslide.
The political damage is negligible. He is purely a narcissistic puppet with a bullhorn. His stupid policies influence a little with market manipulations , however the real damage was done decades ago. Now the snowball going down the mountain is too big to stop. My personal theory is the USA is also behind in their currencies own destruction.
The political damage is huge. Trump has now set the standard for the world that, no matter what deal you sign with a "sane" US President, the next one might also be "purely a narcissistic puppet with a bullhorn" who is more than willing to rip up agreements and demand concessions to stroke his ego. In addition to that, America has shown that there is zero political will to stand up to or punish the next US President that is "purely a narcissistic puppet with a bullhorn" by the opposition party and that the American people are totally willing to elect someone that is "purely a narcissistic puppet with a bullhorn" multiple times.
The amount of soft power Trump has burned is absolutely staggering and will have ongoing effects for decades.
Spoken like a true red blooded American who has no clue what damage has been caused to the US reputation worldwide over the last 2 (TWO) Trump terms.
The only reason that the GOP is in trouble now is because gas prices have gone up. A large portion of the American electorate is only interested in hurting others, even if they hurt themselves a little in the process. Once they hurt themselves too much then they get mad at MAGA. The Project 2025 crowd knew they had a small window to get as much of their priorities done as possible because they probably wouldn't get another shot after fucking shit up as bad as they planned to.
Bs read up on the banking crises of the 1800s the fed was created for a good reason. Congress and the executive branch is the problem not the fed. If not for the technocrats at the fed we would have a financial crisis every decade. The only reason corporatists like Ron Paul don’t like the fed is due to them having power over private bankers
I wouldn't buy a US debt loan at this low of a rate. The US will be unable to meet it's financial obligations easily within 10 years and I would figure many of these will be getting defaulted on.
This should have happened 2 years ago, but the Bond market mistook falling job creation numbers for an economic slowdown and there's been an artificial demand for the safety from a recession that never happened.
In reality, job creation fell because immigration took a nose dive starting in June 2024 when the Biden admin put a strict limit on daily asylum claims and continuing on through all of Trump's visa changes. Jobs can't be created if there's no one to hire.
Yes, Iran and ballooning debt are factors, but bond market capitulation has been a long time coming. A 4% US10Y with 3%+ inflation made no sense.
I don't know how you could possibly come to that conclusion. If anyone is exhibiting political bias, it's the market. Conservative media said recession was imminent and the news was fake when Biden was president. Now liberal media is saying recession is imminent and the news is fake under Trump.
The reality is the economy has been extremely strong under both presidents. Perhaps it's strong in spite of one and because of the other, but it's been consistently strong nonetheless and the bond market has been in la-la-land until now.
The fact that our GDP is even growing at all despite the civilian labor force shrinking is mindboggling.
You have it backwards. Bond yields rise when the economy is strong as investors move into risk assets to chase higher real returns. Bond yields fall when the economy is weak as investors flee to safety.
S&P 500 Q2 2026 YoY earnings growth of 52%
U3 is 4.1%
2.2% Q2 GDP growth
DXY 102 as of today
If you don't think these are markers of a strong economy, it is you who is politically biased.
I actually have to check the date of these posts every time because it feels like we literally see this headline every single day lately. At this point it really just feels like waiting for the other shoe to drop
Please name a currency that hasn’t been devalued significantly. Even the vaunted Swiss franc has lost 70-75% of its purchasing power. Gold bugs will of course say something but that ship sailed a long time ago.
jarena009 | 10 hours ago
I'm concerned not due to any potential crash but because of the implied strain to household and many medium to small business finances and borrowing costs, in an economy that was already K shaped and bifurcating... plus politically worried this is going to be used as an excuse for significant cuts to Social Security, Medicare, Medicaid (at a time where we have record corporate profits in the US, record concentration of wealth at the top, making these implied cuts a giant slap in the face for working Americans).
The 10 year yield is generally a benchmark for lending across a variety of avenues across the entire economy, including mortgage rates and auto loans, but also business borrowing, especially mid and small businesses, and can eat into ,(reduce) capital investments and profits.
Consider it a cost/price increase, especially at a time when costs / prices are already high and many non tech sectors (such as consumer goods and retail) have relatively low margins (ex. P&G), not to mention underlying household finances.
Cybertronian10 | 9 hours ago
What worries me is that the only parts of the economy doing well are doing so off the back of an obviously unsustainable AI bubble. How long until higher borrowing costs pop that and we are left with an economy where every sector is down from where it was a decade ago
Karliquin | 7 hours ago
Given the debt for ai raising is higher than treasury rates and basically competing for attention from the rich who can invest, I think we can see that soon. The WTO already admitted they failed on the goods side reporting and it was up around 19% with 55% of new growth being AI related. That shift where the bonds aren't selected is already happening now.
Cybertronian10 | 7 hours ago
I don't have a crystal ball (unfortunately), but my best guess for timeline is that this winter is when things are going to begin. Supply restrictions and empty reserves heading right into a winter that should be worse than historic averages for climate reasons is a recipe for crazy price jumps and emergency actions by localities. Imagine what happens to investor confidence if local governments have to start cutting off already powered data centers to prevent blackouts for residential areas.
Ashamed-Status-9668 | 6 hours ago
I also don't have a crystal ball but next year is looking like its going to be way too interesting for me.
Karliquin | 6 hours ago
Oh that is definitely the case. Google had to hide at all levels what it was doing in The Dalles, Oregon. The data center infrastructure is already competing for energy. It is somewhere between 20-25% of total electricity in Dublin meaning schools and shit dont get built for data centers.
I dont think you need a crystal ball to see it as overmanufacted and breaking along any of the atressed points.
nicetriangle | an hour ago
Yeah I just listened to a good episode of the Better Offline podcast with Paul Kedrosky guest appearing and he went fairly deep on what your talking about here.
It really looks like we’re witnessing a historically bad economic timebomb in progress. Whenever this falters it’s gonna take so many sectors of the international economy with it. The people involved should be held criminally liable.
[OP] One-Emu-1103 | 10 hours ago
I was thinking about that. I can't speak for other parts of the US or the world, but the one thing I've noticed in North Carolina is that people who aren't the gentry don't count but are used for their votes. They are supposed to service or suck up to them much like a cheap whore would a John, but not look like a streetwalker when they do - and be glad for the crumbs they get and look down on those who don't have that
Gamer_Grease | 8 hours ago
That’s just Southern culture to a certain extent.
spunkychickpea | 8 hours ago
You’re not wrong. I live in the south and have known some people in the past who were absolutely in the top 1% of earners. Witnessing their attitudes towards working class people was like getting a tiny sample of what feudalism looked like. And even then, those rich people I knew were of the Mark Cuban flavor of wealthy, where they thought “Oh, no. It’s the other rich people who cause all of the problems!”
Jesus_on_a_biscuit | 8 hours ago
And also pretty much all of the United States.
Clawdius_Talonious | 5 hours ago
I've often said that our self appointed aristocracy believe that America exists to free them from Noblesse Oblige.
BroughtBagLunchSmart | 8 hours ago
Republicans know that they can redirect the anger of high prices towards women and minorities. Republicans are rewarded for doing a shitty job because they pander to the dumbest religious people in the country. We are not allowed to talk about it or they have tantrums and continue voting for nazis.
Oryzae | 3 hours ago
> towards women and minorities
This doesn’t seem to be working too well as plenty of women and latinos vote for Trump. Latinos in particular flocked to him compared to Biden.
BroughtBagLunchSmart | 2 hours ago
Of course, he told comfortable lies to idiots, the ol' Reagan special.
Willster328 | 9 hours ago
10 year is directly considered for mortgage rates.
10 year is not at all considered for auto rates. Not even a little.
sck178 | 9 hours ago
10 yr can be used for a measurement of multiple loan rates, including car loans and mortgages I thought. I have read the 5 year is considered a better benchmark for car loans specifically.
Willster328 | 8 hours ago
(For Auto) The 5-year 100% yes, the 10-year definitely not
Think of it from the lenders POV. You have $30k to do something with. You could either lend it or invest it. If you lend it, ask, what's the average time it takes for you to get your money back? The weighted average life of car loans is anywhere from 3-5 years on average. So you benchmark the rate on your auto loan to the rate you could get just investing in a 3 year or 5 year treasury.
You would never compare the return to what you get on a 10-year treasury because you'd never be recovering your auto loan over 10 years
Mortgages on the other hand look at the 10-year because thats the average life of the loan. Even 30-year mortgages, because over that span there is not only lots of prepayment opportunities but there's also refinance opportunities where institutions dont often see the full 30-year repayment term
sck178 | 8 hours ago
Oh! okay I definitely am a novice when it comes to all this economic data. I'm trying to get better with understanding it all. Thank you for the explanation!
Willster328 | 7 hours ago
For sure :D youre on the right track!
3_Thumbs_Up | 4 hours ago
But the 5 year rate is not completely independent of the 10 year rate, so there's still a correlation, albeit significantly weaker.
Willster328 | 3 hours ago
Sure, don't think that changes anything in this particular discussion though. The headline was about how high the 10-year is now, and the comment was about how that (incorrectly) affects auto rates.
The 5 year crossed 4.95 a week ago, and the last time it did that was just 2 years ago, and its only up ~10bp from there. The 10 year on the other hand crossed the 4.98 it was at 2 years ago also, but now it's 30 bp above that. Completely different magnitude and reasons why
Ashamed-Status-9668 | 6 hours ago
There are 96 months (8 years) auto loans now. I wonder if those lean towards the 10-year?
blasek0 | 6 hours ago
They still typically trade in before they 5 year mark.
tapwater86 | 9 hours ago
It’s only a matter of time though. We’re seeing 10 year auto loans now. I saw a commercial last night for 6 year financing on a fucking mattress.
Willster328 | 8 hours ago
Even if the term is 10 years the weighted average life of that loan will still be considerably less. And its such a small segment of lending you wouldn't consider it in general conversation on the topic
BloodLust2222 | an hour ago
As someone who is in car lending, You are 100% wrong. Most new car loans that are getting approved these days from banks and credit unions are 6-8 year loans because that's the only way people can afford a new vehicle.
Willster328 | an hour ago
As someone who is part of a credit union consumer pricing committee and reports to the ALCO, you are 100% wrong.
Auto lenders push for 6-8 year car loans because theyre predatory to financially illiterate borrowers to try and convince them to buy something they otherwise couldn't afford by making the monthly payment look more attractive.
And even IF your hypothesis that "most new loans" are 6-8 years, it still wouldn't price off the 10 year treasury, the weighted average life of those loans is still at 5 years
Ashamed-Status-9668 | 6 hours ago
Exactly this for me too. Next year is going to be really hard for the average person in the US if things keep trending like they are.
PS: I really like these empathic ways of thinking about issues. We should do more of this as a society.
Scary_Firefighter181 | 10 hours ago
It might just be me, but I feel like we've been seeing this exact same news repeated multiple times over the last two weeks or so tbh. And heck, with the way things are going, we probably are going to see more of these articles again for a while.
vafrow | 10 hours ago
People have gotten numb to it but I think the most recent headlines are emphasizing that we're now back to 2002. Which means we've eclipsed the worst of the 2007/2008 crisis.
This is just one indicator, but its a big one and to be out ahead of a huge financial crisis ajd it not be the top day to day story is pretty indicative of how chaotic things are right now.
Select_Season7735 | 10 hours ago
Yep, headlines started out as “Bonds back to levels not seen since 2022”
skoalbrother | 10 hours ago
Soon it'll be levels not seen since the 1970's
a_library_socialist | 9 hours ago
Then the 1920s, in Germany . . .
somasomore | 8 hours ago
It was 15% in 1982...it's not going that high
Known_Crab1059 | 8 hours ago
I remember when Trump could not be stupid enough to actually attack Iran
Or Putin would never be stupid enough to actually invade Ukraine
Or Soviet Union has to pay it's loans, it's just too big to fail
214ObstructedReverie | 6 hours ago
> I remember when Trump could not be stupid enough to
I've certainly never accused him not being stupid enough to do something.
_Gobulcoque | 8 hours ago
> it's not going that high
You hope...
jetpacksforall | 6 hours ago
It seems hard to imagine but if the US continues shitting the bed fiscally, diplomatically, militarily, and economically, softening investor demand will eventually push rates up toward banana republic levels, no?
Pretend_Handle_7639 | 4 hours ago
Well Tamar, have you seen the world?
It's not implausible that prosperity and low interest rates were... checks notes a product of a world and Status Quo Order that had successfully reduced and then eliminated trade barriers and conflict on a planetary scale. It would then follow that the collapse of that Order, alongside the collapse of easy movement of capital and labor would reduce that prosperity and force interest rates back up.
No-Library4071 | 5 hours ago
Nobody does big numbers better than Trump, nobody.
BloodLust2222 | an hour ago
I hope they do, Then a home would cost $50k instead of $500k.
082426grateful | 9 hours ago
Why does that matter to you? CNBC and others love to parrot record highs in stock market levels when those happen. Why not mention that bond yields are as high as they are?
GustavoTC | 7 hours ago
Because this is fucking over anyone with a mortgage, auto loan or any debt
InitiatePenguin | 3 hours ago
Not with.
Will/want to get a mortgage or loan.
OddlyFactual1512 | 10 hours ago
Debt/GDP in 2002 was less than half what it is today. Then, the economy was stable, it had strong entrenched alliances with every other developed nation, stable leadership, and a more than manageable debt. The only thing that was the same is we had a war hungry president. Long term bond yields had a relatively low upper limit due to the nation's standing economically and geopolitically. Today, those safeguards are gone. When I ask myself what will stop the current trend, I can't come up with a good answer. I won't be surprised if we see double digits before the current administration's term ends.
Edit: fixed the typo of 2022 to 2002.
Agitated_Tip_8713 | 9 hours ago
Do you mean 2002?
OddlyFactual1512 | 9 hours ago
Yes, and I fixed it
Consistent_Laziness | 9 hours ago
8% will explode the economy. 10%+ would be a nuclear meltdown. Things will break before we get that high.
And Biden was war hungry? That’s the only thing you said that made me fur my eyebrows.
OddlyFactual1512 | 9 hours ago
>8% will explode the economy. 10%+ would be a nuclear meltdown. Things will break before we get that high.
Things can break while bond yields continue to rise. It ALWAYS happens when a nation encounters a debt crisis it can't or won't control. This is a debt crisis The US won't control, and getting closer and closer to one it can't control.
>And Biden was war hungry? That’s the only thing you said that made me fur my eyebrows.
That's because my year had a type. I fixed it.
Consistent_Laziness | 8 hours ago
Oh yea the year threw me off. That makes more sense.
We are 100% headed to a meltdown. When Republicans lose trump will melt down and be even worse than he already is. 2027 & 2028 are going to be bad years.
Gamer_Grease | 8 hours ago
The economy was not stable in 2002. That was the beginning of the housing bubble and right around the financial deregulation that would ultimately cause the Great Financial Crisis.
OddlyFactual1512 | 8 hours ago
A housing bubble that continued to inflate until Q1 2007.
https://fred.stlouisfed.org/series/MSPUS
Gamer_Grease | 8 hours ago
Yes, although IIRC the big turning point was 2006. Still, I would not call that a stable environment. The economy was actively overheating.
a_library_socialist | 8 hours ago
Biden continued plenty of Trump I's idiocy, particularly in regards to China. I think you're being overly generous here.
OddlyFactual1512 | 8 hours ago
First, my comment compared 2 points in time, neither of which occurred during Biden's presidency. Second, what is your point and how does it relate to a resolution to the current situation? I'll give you a hint: it can't.
a_library_socialist | 8 hours ago
Your post said 2022, not 2002, at the time I wrote my comment.
> Second, what is your point and how does it relate to a resolution to the current situation?
That the problems causing the American Empire to crash are not just limited to a dang cheeto in the whitehouse. Trump's idiocy is accelerating them, but the problems of the US that the bond market is starting to reflect are long running and won't be changed just by voting another do-nothing Democratic neolib fossil in.
OddlyFactual1512 | 7 hours ago
My comment was last edited over an hour ago. Your comment was posted 22 minutes ago.
a_library_socialist | 7 hours ago
yeah buddy, you caught me, I purposefully responded to the wrong year, magically guessing by sheer chance the previously wrong year you'd put in before.
heheheh worked again, lucky me!
Take your meds.
OddlyFactual1512 | 7 hours ago
You can hover over that times to see when the posts were last edited and initially posted. The factual timestamps refute your assertion.
a_library_socialist | 7 hours ago
yup, sure thing, bud
skaestantereggae | 8 hours ago
So I was in the second grade in 02. What made the bond rates back then higher than 07/08? 9/11 fallout?
devliegende | 7 hours ago
Nothing special. Rates over 5% were normal back then. Treasuries went down during the crisis because it was considered the only sure thing. Same with 9/11. When the world was scared they bought Treasuries.
skaestantereggae | 7 hours ago
Oh yea I guess that makes sense.
Ok-Psychology7619 | 5 hours ago
> It might just be me, but I feel like we've been seeing this exact same news repeated multiple times over the last two weeks or so tbh
Well because the 10-30yr treasuries keep going up and up without signs of stopping
myfotos | 5 hours ago
Literally every day it just moves up to the next milestone. Highest yields since... When is the the highest anyway? I guess headlines after that become new all time high!
King-Meister | 10 hours ago
Could someone tell me where is the money going?
If the big funds (such as pension funds) aren’t buying the bonds (I mean the total volume is lower - which is leading to an increase in the rates), then where are they parking their money?
Tammer_Stern | 10 hours ago
Big pension funds have an international reach so don’t have to buy US bonds when the UK 30 year is 6%.
Also, pension funds buy bonds when they have huge Defined Benefit and Annuity pension arrangements. These have shrunk a lot in recent years as people have Defined Contribution pensions now and often use Income Drawdown instead of an Annuity.
Upstairs_Baby8424 | 9 hours ago
Well big investors used to take less because the US was the most trustworthy and stable financial institution. Was.
King-Meister | 8 hours ago
But the fact that UK's 30Y is 6% also an indication that the investors aren't wanting to buy that too? Had there been a huge migration of funds from US bonds to UK bonds, the UK rates should've gone a bit down, but that too is on a steady rise. So, doesn't that indicate that a lot of buyers are not participating in the bond market because they aren't satisfied with the current rates? If yes, then are they just letting their money remain idle in the bank accounts / buying short term bonds?
Known_Crab1059 | 7 hours ago
They are increasingly going into PE scam funds
OddlyFactual1512 | 9 hours ago
Short term treasuries, municipal bonds, and corporate bonds
aedes | 9 hours ago
Treasuries are how the US government deficit spends - they borrow someone else’s money with interest.
The current issues are that the current government has issued so much debt in a short period of time they’ve saturated the market. The size of the bond market puts a hard cap on how much the US can deficit spend.
So it’s not necessarily that the money is going somewhere else. It’s that the US keeps trying to sell more of something and there aren’t as many buyers left.
There are other variables too like investors trusting the US less to pay them back, or fear that inflation will be persistently high and the US dollar will devalue, making those interest rates much lower effectively for an investor than they are on paper.
All that together means less people wanna buy US government debt, meaning yields go up.
Walker_ID | 9 hours ago
At what point do high bond yields become more attractive than stocks?
Gamer_Grease | 8 hours ago
When there is an expectation that yields will come down in the future. The problem is that they’re rising so much right now and nobody is proposing any measures to bring them down.
scoofy | an hour ago
Never if the entire point is "we expect you to inflate the currency to pay for this." At that point, stocks suffer, but they start acting like real assets, which are effectively an inflation hedge.
We at the point US public debt per capita is $114,020. That's absurd and insurmountable. The fact that we're at that point and that there has been near-zero attempt to lower the accelerating deficit means something has to give and the government has no credibility.
The US likes to pretend it's Japan, but it's looking more and more like Argentina.
King-Meister | 9 hours ago
My understanding is that the Fed isn't printing money / creating new money right now. So, even if the US government is issuing new bonds, isn't it being done to pay off the maturing bonds? Usually, most of the maturing bondholders would buy back the new bonds. If they aren't doing so, then where are they parking their money (I am assuming it is in billions because only then would it be relevant enough to make the yield curve move significantly)? On a very zoomed-out scale, isn't the total money supply for USD constant (as of now)?
As for investors trusting the USD less, I was reading that this is the case for a lot of other developed economies. So, aren't investors avoiding long term government debt as a whole because many of them feel the yield rates aren't priced appropriately? If a lot of them are holding back from buying long term sovereign debt (across multiple economies), then where is that extra money being held? Someone commented, in their bank accounts / HYSA. I wanted to understand whether that is the case or not.
aedes | 8 hours ago
>So, even if the US government is issuing new bonds, isn't it being done to pay off the maturing bonds?
US debt has increased by 44% in just the last 5 years. And thats excluding what was done during COVID.
When a government deficit spends, that money comes from investors, who give the government money in exchange for interest payments.
If too much debt is being issued in a short period of time, it saturates the market. People are full on US debt and don’t really want that much more, so they aren’t willing to buy more unless the rate of return is even higher (yield).
Throw in some other variables like investors not trusting the quality of that product as much anymore, foreign central banks starting to move away from buying and holding US treasuries back in 2021/22, and concerns for US inflation plus currency risk making that yield much lower than the coupon rate in reality, and you have much of the current situation.
Sryzon | 8 hours ago
Cash and cash equivalents.
https://fred.stlouisfed.org/series/BOGZ1FL193020005Q
https://fred.stlouisfed.org/series/MMMFFAQ027S
https://www.marketwatch.com/investing/index/dxy
nostrademons | 6 hours ago
Money flows through markets, not into markets.
Likely it's leaving capital markets and entering the real economy. One concrete destination for this capital is AI corporate bonds; this has been cited as the big reallocation for many sovereign wealth funds (eg. the Netherlands last month). When money moves from government debt to AI bonds, those companies then spend it on datacenters, where it goes to bid up prices for electricians and computer equipment and then ends up in the income statements of NVidia, Broadcom, Micron, Samsung, SK Hynix, etc. As a result, the demand for capital increases.
Another factor is likely demographics. It's been predicted for decades that the peak of the baby boomer generation would hit age 70 (and also likely hit peak retirements) in 2025. At the same time, this is the the start of the labor career for the post-2003 baby bust. The labor force is shrinking. As more people depend upon their retirement funds to support themselves, they have to pull money out of capital markets and spend it on consumer goods. At the same time, young workers don't have spare income to invest in capital markets. As a result, the supply of capital shrinks.
If you take out all of the noise around inflation, the Fed, government bonds, government deficits, stock market bubbles, changes in the economy, etc, the natural rate of interest is set by supply and demand in the loanable funds market. When demand goes up and supply goes down, the interest rate is going to rise to equilibrate them.
Select_Season7735 | 10 hours ago
Cash? Interest rates being high = good for HYSA
Consistent_Laziness | 9 hours ago
When is my HYSA going to update my rate!?!?
tapwater86 | 9 hours ago
Ally bumped 0.1% within the last 30 days.
Consistent_Laziness | 9 hours ago
.1% increase is criminal….. I want 4.5% gosh darn it.
Single_External9499 | 7 hours ago
You are witnessing the delayed effect of the overall shift from pensions to 401k's in the 80's and 90's. The money is being paid out to the remaining pensioners and that's it.
[OP] One-Emu-1103 | 10 hours ago
Government borrowing costs rose around the world on Thursday, continuing a months-long trend as investors express concerns over a lack of political action to tackle fiscal deficits, while inflation remains sticky and interest rates rise.
Z3r0sama2017 | 6 hours ago
As always, politicians will only take action when it's too late and investors force them too.
Consistent_Laziness | 9 hours ago
Each headline says the same thing except the year is going further back. At this rate we’re going to run out of years and just say the highest ever! Man such incompetence I can’t even comprehend it.
Well my HYSA better update soon because 3.3% is no longer competitive. I’m expecting at least 4%
CalligrapherFew5766 | 6 hours ago
HYSA go off the fed funds rate, if I'm not mistaken. So, in your case, you're hoping Warsh continues to hike rates.
Consistent_Laziness | 5 hours ago
Idk. They were reducing the rate even while we held steady. If it were based off the fed rate every bank would offer the same thing no?
nostrademons | 54 minutes ago
They're based off the FFR but subject to individual competitive pressures and corporate policy.
What happens is that the FFR effectively sets a ceiling on what the bank can pay in interest and still remain profitable. If the bank can borrow at 4%, they can afford to pay you up to 4% and still make money.
Are they actually going to pay you 4%? Well, it depends. When the Fed first hikes rates, why would they? They can just keep paying you 1%, lend to another bank at 4%, and pocket the difference. But over time, some other bank is going to realize "Hey, I can attract more deposits if I raise my interest rate to 3%, and then I will have more capital available to lend to other banks at 4%". And so on, until the rate competitively approaches the FFR.
When the FFR drops, this dynamic works in reverse, except there are some obligations the bank has that they cannot arbitrarily rewrite. So for example, if someone has a CD at 5% and it now costs the bank 4% to borrow, the bank can't just start paying 4%, because they contractually guaranteed 5%. They're going to take a loss on the CD, and so to make it up they will often drop rates on demand deposits pre-emptively when they expect the Fed will drop, as a way of getting ahead of their other obligations.
Now that the Fed is hiking again, expect the HYSA to eventually go back up, but eventually is the key word. Why pre-emptively raise their deposit rates and leave money on the table unless they're forced to by competitive pressures?
Consistent_Laziness | 40 minutes ago
Makes absolute sense. Thank you for explaining this so precisely. I’ll have to look around and see if my bank is competitive, SoFi.
NorthSideScrambler | 3 hours ago
The only reliable way to match the federal funds rate is to open a brokerage account and put cash in "money market" funds that serve as abstractions over short-term US government bonds.
OddlyFactual1512 | 9 hours ago
Someone please tell me what conditions are present to control the rise in The United States. These are the stabilizers that we have had in the past that aren't present today:
In every other crises, it was nearly certain the government could and would act with prudence (even if that was obscene corporate bailouts) to ensure economic crisis didn't result in economic ruin. Now, I can't even fathom a way in which the government COULD stem an economic crisis. What's worse, is I'm certain the current leadership would use it as an unfettered grift which would have the opposite impact.
I've been against the doomerism since I can remember. At least I was until now. There is just nothing I can see that will stop this collapse.
CremedelaSmegma | 8 hours ago
There is some mechanics at play that made this somewhat inevitable from a credit structure standpoint.
The longer end of the yield curve is chalked full of trillions of dollars of underwater and negative real yielding bonds. Commercial banks, insurance companies, private and public pensions, etc have them in “held to maturity accounts” so they don’t have to mark to market. And if they did they would be immediately underwater. See Silicon Valley Bank.
What people called glorious credit expansion and soverign and high quality corporate ballast at the long end is now dead weight. Just taking up the volume at the long end. It’s a shallow pool of liquidity filled with boulders and silt.
The short end, 1-3 years maybe a bit longer had the duration roll off the booms and is fairly liquid. It is a deep and liquid end of the pool.
So it takes very little drop in demand at the long end, a shift to shorter duration, cash, and cash like instruments to drive the long end up fast, and the short end absorb it without driving up credit at the short end nearly as much.
The only way to clear it is to:
Wait 10-20 years for all the ZIRP era debt to roll off.
Or have the Fed go in and put them on their books at or near par value.
Some black swan or major event somehow causes a flight to long duration safety (I have no idea what that might be).
Edit: There are more complex solutions like the Fed and Treasury creating special purpose vehicles or the like to load all that onto, but it would take stretching the rules and laws right to the breaking point.
Darkpriest667 | 8 hours ago
A pending heart attack would -- or you can wait 24 months. That's what will fix this. Like the Iranians said, we only have to outlast Trump.
tke71709 | 8 hours ago
This is such a naive take. You think everything just goes back to "normal" once Trump leaves office?
The damage done will take decades to fix, if ever.
Darkpriest667 | 8 hours ago
not normal. I'm not a TDS guy, but he has been a disaster for the world economy. It will take a decade to recover from this.
The biggest problem is every single government on earth is addicted to debt spending.
Which_Crow_3681 | 7 hours ago
Trump is an asshole , but yes you are right. This has been the norm since the creation of the central banks and fractional banking system.
tke71709 | 7 hours ago
I was talking the political damage and add on impacts to the economy through a lack of a rules based international order. Who wants to invest money in doing business with the US when they constantly change the rules based on a tweet?
And the US is perfectly content to elect another president who will do the same thing in the future.
Oh look a Democratic landslide is coming, bitch, winning a bunch of races 52-48 is not a landslide.
Which_Crow_3681 | 6 hours ago
The political damage is negligible. He is purely a narcissistic puppet with a bullhorn. His stupid policies influence a little with market manipulations , however the real damage was done decades ago. Now the snowball going down the mountain is too big to stop. My personal theory is the USA is also behind in their currencies own destruction.
MephistoHamProducts | 5 hours ago
The political damage is huge. Trump has now set the standard for the world that, no matter what deal you sign with a "sane" US President, the next one might also be "purely a narcissistic puppet with a bullhorn" who is more than willing to rip up agreements and demand concessions to stroke his ego. In addition to that, America has shown that there is zero political will to stand up to or punish the next US President that is "purely a narcissistic puppet with a bullhorn" by the opposition party and that the American people are totally willing to elect someone that is "purely a narcissistic puppet with a bullhorn" multiple times.
The amount of soft power Trump has burned is absolutely staggering and will have ongoing effects for decades.
tke71709 | 4 hours ago
>The political damage is negligible.
Spoken like a true red blooded American who has no clue what damage has been caused to the US reputation worldwide over the last 2 (TWO) Trump terms.
The only reason that the GOP is in trouble now is because gas prices have gone up. A large portion of the American electorate is only interested in hurting others, even if they hurt themselves a little in the process. Once they hurt themselves too much then they get mad at MAGA. The Project 2025 crowd knew they had a small window to get as much of their priorities done as possible because they probably wouldn't get another shot after fucking shit up as bad as they planned to.
AmphibianMammoth | 4 hours ago
Bs read up on the banking crises of the 1800s the fed was created for a good reason. Congress and the executive branch is the problem not the fed. If not for the technocrats at the fed we would have a financial crisis every decade. The only reason corporatists like Ron Paul don’t like the fed is due to them having power over private bankers
BloodLust2222 | an hour ago
I wouldn't buy a US debt loan at this low of a rate. The US will be unable to meet it's financial obligations easily within 10 years and I would figure many of these will be getting defaulted on.
Sryzon | 8 hours ago
This should have happened 2 years ago, but the Bond market mistook falling job creation numbers for an economic slowdown and there's been an artificial demand for the safety from a recession that never happened.
In reality, job creation fell because immigration took a nose dive starting in June 2024 when the Biden admin put a strict limit on daily asylum claims and continuing on through all of Trump's visa changes. Jobs can't be created if there's no one to hire.
Yes, Iran and ballooning debt are factors, but bond market capitulation has been a long time coming. A 4% US10Y with 3%+ inflation made no sense.
OddlyFactual1512 | 8 hours ago
You are assetting the immediate and obvious cause is a farce purely based on your political bias.
Sryzon | 7 hours ago
I don't know how you could possibly come to that conclusion. If anyone is exhibiting political bias, it's the market. Conservative media said recession was imminent and the news was fake when Biden was president. Now liberal media is saying recession is imminent and the news is fake under Trump.
The reality is the economy has been extremely strong under both presidents. Perhaps it's strong in spite of one and because of the other, but it's been consistently strong nonetheless and the bond market has been in la-la-land until now.
The fact that our GDP is even growing at all despite the civilian labor force shrinking is mindboggling.
OddlyFactual1512 | 7 hours ago
You thinking the economy is strong when bond yields are running up as fast as they are is mind boggling.
Sryzon | 6 hours ago
You have it backwards. Bond yields rise when the economy is strong as investors move into risk assets to chase higher real returns. Bond yields fall when the economy is weak as investors flee to safety.
S&P 500 Q2 2026 YoY earnings growth of 52%
U3 is 4.1%
2.2% Q2 GDP growth
DXY 102 as of today
If you don't think these are markers of a strong economy, it is you who is politically biased.
artisanrox | an hour ago
>Bond yields rise when the economy is strong as investors move into risk assets to chase higher real returns
it's OppositeTime in the MAGA county in the Land of LineGoUp
j821c | an hour ago
I actually have to check the date of these posts every time because it feels like we literally see this headline every single day lately. At this point it really just feels like waiting for the other shoe to drop
higgins9875 | 5 hours ago
Please name a currency that hasn’t been devalued significantly. Even the vaunted Swiss franc has lost 70-75% of its purchasing power. Gold bugs will of course say something but that ship sailed a long time ago.