Monday, June 3, 2013

U.S. 10 Year Bond Yields in Perspective (1790-Present)

Click to enlarge
Note that the other major decline in rates came during the Great Depression and was followed by a decades long climb in rates. I suspect we are are at the very early stages of a new climb in rates. This is not the time to be holding long term bonds.

(Chart via Barry Ritholz)

1 comment:

  1. On Friday May 31, 2013, the Interest Rate on the US Ten Year Note, ^TNX, rose to 2.16%, and as a result, credit died in May of 2013, causing the death of fiat wealth. Debt deflation, that is currency deflation, currency volatility, and unwinding currency carry-trades, turned Nation investment, EFA, and Small Cap Nation Investment, IFSM, as well as World Stocks, VT, strongly lower.

    FT Alphaville chart article relates Suddenly, a bad last day of May for the stock market. I comment that the great reflation trade, that is the EUR/JPY, seen in Action Forex EURJPY Weekly Report, as of June 1, 2013, and seen in the chart of FXE:FXY, is history, as the mother of all bears markets has started. Imagine the global economic chaos that is coming as this carry-trade unwinds.

    Of great significance, the chart of Aggregate Credit, AGG, shows a strong trade lower, being led so by the toxic credit that gave seigniroage to Liberalism’s grand finale rally; this included High Yield Junk Bonds, UJB, Junk Bonds, JNK, Emerging Market Bond, EMB, and Distressed Investments, FAGIX, such as those taken in by the US Federal Reserve under QE 1 to restart the global economy after the 2008 Financial System Crash. The ongoing steepening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening, together with the rise in the Interest Rate on the USTen Year Note, ^TNX, to 2.16%, communicates that the bond vigilantes have gained control of interest rates.
    With Aggregate Credit, AGG, trading lower, credit as a political and economic experience, is history. Credit was a pleasant economic experience of the age of Liberalism. With Aggregate Credit’s pivot lower in value, Authoritarianism’s unpleasant experience of debt servitude commenced. In May 2013, the Interest Rate on the US Ten Year Note, ^TNX, entered an Elliot Wave 3 Up, which will utterly serve to destroy credit forever. Not only have Stocks, VT, and Credit, AGG, traded lower, but, Oil, USO, BNO, Gold, GLD, Silver, SLV, Cotton, BAL, Timber, CUT, Natural Gas, UNG, led Commodities, DBC, lower. All forms of fiat wealth traded lower at the end of May.

    Dispensationalism presents the concept that liberalism was an age of nation state, investment choice based inflationism, producing a moral hazard credit experience of prosperity. Jesus Christ acting in dispensation, that is in the administrative plan of God for the fullness and completion of all things in every age, Ephesians 1:10, terminated liberalism in May of 2013, and is establishing authoritarianism, which is the age of regional governance, diktat based destructionism, producing a debt servitude experience of austerity.

    Wealth can only be preserved by dollar cost averaging into the physical possession of gold in the form of gold bullion and in tradeable form on Internet trading vaults such as Bullion Vault and Gold Is Money.