Monday, May 4, 2009

Treasury Yields at 5 Month High

The yield on ten-year notes today traded as high as 3.20%.

This in an environment where the Fed is pumping money at double digit rates, and we are at the tail end of a recession, which means that this is as deflationary as any prices are going to get. How high will rates climb, once the inflation kicks in and there is a flight from fixed income? My guess, easily double digits at the 10 year range and further out.

And, Bernanke tells us he is going to be able to reverse engines and slow money printing down the road. Huh.


  1. "The yield on ten-year notes today traded as high as 3.20%."

    I may not be following what you are saying so pls forgive me if I am being stupid.

    Does your comment above mean that there is upward pressue on interest rates?

    If so isn't this both a good thing and also gives strength to Bernie-Bank-Man saying he will reverse monetary policy when inflation kicks in? I say it will strengthen Bernie's hand because interest rates will be pushed upwards because of market forces (as per your comment above) thus forcing Bernie to act to dampen the monetary easing he has been responsible for as of late.

  2. @ not an economist

    Yes, I do mean that there is upward pressure on interest rates.

    My point is that rates are heading higher despite the fact that Bernanke is putting huge downward pressure in rates with his money printing. Given, he will always be under political pressure to lower rates, it is going to be tougher for him to slow printing whuch would push rates even higher.