Credit Bubble Stocks is offering an 80% confidence prediction game for 2015. I therefore thought I'd offer some supporting evidence for one of my predictions.
I predict that the 30-year treasury yield will be below 3% for all of 2015.
Click to enlarge.
I have 80% confidence. Here's what I think the remaining 20% looks like.
There's a 5% chance the long-term trend breaks far to the upside in 2015 and my prediction would therefore look laughable in hindsight. Since the data is so noisy, the break in the trend might not even become obvious until years later. It would, however, get more and more humorous for those rightly wishing to heckle me. Heck, I'd be heckling me too.
There's a 5% chance that it pops on up close to 3.5% in utter short-term defiance of my prediction. It would be especially disturbing if it did it in the first week of January, as that would ruin my prediction the moment it got started. Game over.
There's a 5% chance that it pops just over 3% repeatedly throughout the year as a sign from the Gods of Hubris that I overstepped my prophetic authority. 3.01%! Bam! 3.04%! Wham! 3.02%! Zap! 3.05%! Pow! Picture old-style Batman. That's gotta hurt.
There's a 5% chance that something will really surprise me. Perhaps a parabolic trend forms or something even more bizarre. That would probably terrify not just me, but everyone else as well.
In order for my prediction to come true the yield needs to say below the blue line for just a very small moment in time (that last little interval on this long-term chart that spans from 2015 to 2016). I was tempted to go with an average for the year, but this should keep the game more interesting.
In any event, I should be getting off to a good start. We're just now falling below the blue line. Momentum, a long-term trend, and recent oil price movements would all seem to be tailwinds. As for a potential rate hike by the Fed, bring it on (although it would ruin another of my predictions). Heck, take it on up to 5% and watch the 30-year treasury yield plummet. There's nothing the long-term treasury market likes more than a Fed hawk on steroids. It's been awhile since we've seen one, of course.
This is definitely not investment advice. You don't want to be making investment decisions based on 80% confidence levels of random anonymous bloggers on the Internet! Trust me on this! And if you do trust me on this, stop it. You should not trust random anonymous bloggers on the Internet! Hahaha! :)
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