Some Perspective on the "Rising" Interest Rate Environment

The following chart shows the 10-year moving average of the 10-year treasury yield.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjRHidp9L8U7DrbferBXTiRfaMNJOoFLESBnEzJImr3H6xPMZMPp6OxSwXvk6C9VbUWi6348bgpKgjQ0zHJbMcAXNJ6pHZOzwAPRqKE5Dkwo36p6A6LoypkZ2lFJJQt3OGlNzjmi8ldpW8/s1600/The+Rising+Interest+Rate+Environment.jpg" imageanchor="1"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjRHidp9L8U7DrbferBXTiRfaMNJOoFLESBnEzJImr3H6xPMZMPp6OxSwXvk6C9VbUWi6348bgpKgjQ0zHJbMcAXNJ6pHZOzwAPRqKE5Dkwo36p6A6LoypkZ2lFJJQt3OGlNzjmi8ldpW8/s320/The+Rising+Interest+Rate+Environment.jpg" /></a><br /><span style="font-size: x-small;">Click to enlarge.</span><br /><br />Rising interest rates? In my opinion, the bond market is simply trying to climb back to the long-term declining trend.<br /><br />Long time readers know that I post a lot of exponential trend failures on this blog. You might therefore wonder why I trust this one not to fail. The simple answer is that I don't. It's more of a question of which direction it would fail.<br /><br />I am definitely in the minority. As seen in the chart, we're currently well below trend. I do not believe this economy is strong enough to support a sustained climb back up.<br /><br />This chart predicts that the 10-year moving average of the 10-year treasury yield will be 3.0% in August of 2018. That's roughly 5 years away. I shall take the under.<br /><br />It's just an opinion of course.<br /><br /><i style="color: #666666;">Opinion has caused more trouble on this little earth than plagues or earthquakes.</i> - Voltaire<br /><br />My opinion isn't going to do much in the grand scheme of things. If I am wrong, no big deal. I'm in the minority here. Who cares what I think? It is the opinion of the masses, those in ivory towers, and those in power that would concern Voltaire most more than likely.<br /><br /><b>September 3, 2013</b><br /><a href="http://www.marketwatch.com/story/5-ways-to-prepare-for-higher-interest-rates-2013-09-03">5 ways to prepare for higher interest rates</a><br /><br /><div style="color: #666666;"><i>If you don’t like the idea of buying individual bonds but don’t want to get burned by raising rates, short-term bond funds are an alternative.</i></div><br />Yes, short-term bond funds! It's worked out great so far. Just get in there and patiently wait for the end of <a href="http://research.stlouisfed.org/fred2/graph/?g=mnB">ZIRP</a>. It is <a href="http://muddywatermacro.wustl.edu/zero-bound-problem">bound</a> to happen any day now!<br /><br /><a href="http://finance.yahoo.com/q/pm?s=SHY">Yahoo: SHY Performance</a><br /><br /><div style="color: #666666;"><i>3-Year Total Return (Mkt): 0.56%</i></div><br />This is not investment advice.<br /><br /><b>Source Data:</b><br /><a href="http://research.stlouisfed.org/fred2/graph/?id=WGS10YR">St. Louis Fed: 10-Year Treasury Yield</a>

Some Perspective on the "Rising" Interest Rate Environment

The following chart shows the 10-year moving average of the 10-year treasury yield. Click to enlarge. Rising interest rates? In my opinion, ...

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