Click to enlarge.
Note that since the Great Recession about the only thing that seems to rise is the yield's inverse. Go figure.
If history is a guide, we just need five things to make short-term interest rates actually rise.
1. Pearl Harbor.
2. Patience.
3. Real economic growth.
4. A hawkish Fed.
5. Sarcasm.
In all seriousness, the 3-month treasury yield didn't hit 1% until 1948. That was nearly two decades after the stock market crash of 1929. In hindsight, savers couldn't even count on World War II to get yields higher. So why is there so much hope now?
I'm clearly not an optimist. Other than the long-term death of real yields, there's very little I count on. It's been a central theme of mine since turning permabearish in 2004. I'm not saying that the "death" is guaranteed to continue, but I would be among the last to bet that savers will soon be handsomely rewarded on their $7 trillion in savings deposits. That's six times what it was in 1995.
In fact, I'd probably be fighting the Japanese over that last bet opportunity!
Long-term TIPS bonds are/were the bubble? Seriously? At least long-term TIPS bonds are still paying a positive real yield, unlike the 0.51% nominal yield on the typical 5-year CD. And with $7 trillion in savings deposits, is that low rate really all that shocking? Banks should just put out a sign.
Why the @#$% do you think we want you to deposit even more of your @#$%ing money? We're in the @#$%ing lending business for @#$%'s sake!
This is not investment advice.
Source Data:
St. Louis Fed: 3-Month Treasury Bill: Secondary Market Rate
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Posted by: Tukiyooo
The Rising Interest Rate Environment Updated at :
11:49 PM
Friday, November 15, 2013
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