Interest Rates and US Treasury Yields.

[Go2Guy]

The 10-yr US Gov Treasury has crossed the 3%; first time in years. Historically, not a huge rate, but relative to the Great Resesson of '09, this is somewhat a milestone. The stock market is adjusting and reacting; the important question is how high and how fast?

 

[Cyclonepride]

The 10-yr US Gov Treasury has crossed the 3%; first time in years. Historically, not a huge rate, but relative to the Great Resesson of '09, this is somewhat a milestone. The stock market is adjusting and reacting; the important question is how high and how fast?

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It should be at 4.5% if it truly reflected the reality of the situation.

 

[Sigmapolis]

There is lots of research out there saying that real interest rates going forward are going to be lower than real interest rates in the past.

That is going to make macroeconomic cycles... well, screwy.

Harder to bring things back in line when you are naturally closer to the zero bound.

 

[Go2Guy]

It should be at 4.5% if it truly reflected the reality of the situation.

You don't feel the bond market a true reflection / barometer of reality? Just wondering - how / who feels the 10-yr should be 4.5% ?

 

[ArgentCy]

If we finally break through 3% we could see them double to 6% far quicker than most would expect.

 

[Cyclonepride]

You don't feel the bond market a true reflection / barometer of reality? Just wondering - how / who feels the 10-yr should be 4.5% ?

I'm struggling to find where Google buried it, but I heard this on a radio investing show about a week ago. It makes sense, as the rates are artificially set (when the government can buy its own debt, it doesn't need the market).

 

[Bestaluckcy]

Isn't 4.5% the rate some economists project as a normalized rate. Which they define as being two per cent over the current inflation rate?

The weakness of this line of thinking is it does not take into account the economic need for money (stagnant vs full production), or propensity to save; things such as the baby boom generation current propensity to buy fixed income vehicles for their coming retirement years. I have read more than once that the toughest thing to forecast is interest rates accurately, and believe it to be the case. That has never stopped people from forecasting however. (smile)