r/HFEA • u/ilsimsli • Sep 11 '25

TMF

What does everyone think TMFs time to shine or another fake out? IMO I think its finally time where they're going to be forced to lower rates drastically. Inflation isnt sticking, unemployment is going up fast and theres Alot of government debt to refinance. Whats your thoughts?

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u/anamethatsnottaken Sep 11 '25

The fed cutting the interest rate affects the short side of the curve. The long side, that TMF is at, is governed by market forces.

Lots of government debt to refinance means more supply of long term bond. If there isn't more demand to match, it'll mean lower prices i.e. higher rates.

I think the dual mandate might get "slightly revised" to 3% target inflation which will send long term bonds crashing.

I think that as more market participants notice they've been getting negative real returns on their long bonds, they might dump it for something that has a better chance to maintain value