Thursday, October 16, 2014

Is the Multi-Decade Decline in Long-Term US Interest Rates Over?

I contend it is. Ultimately price inflation will kick in and push rates dramatically higher. This may take some time, but the bottom in long-term rates was probably set in July 2012 at aprox. 2.06%. on the  Long-Term Average Rate, "LT>10" for Treasury securities*. The current rate, despite the recent flight to US bond "safety" is aprox. 2.66%/

*The Long-Term Average Rate, "LT>10," is the arithmetic average of the bid yields on all outstanding fixed-coupon Treasury securities (i.e., excluding Inflation-Indexed securities) with 10 years or more remaining to maturity.

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