Monday, January 19, 2015

Did US Interest Rates Bottom in 2012?

The recent dip in interest rates have caused many to hold the view that interest rates are now at new lows, but this is not the case. The bottom on 10-year Treasury securities, for example, was more than two years ago on July 25, 2012.

You can't know precisely what the future holds, but given the amount on money the Federal Reserve has printed since the 2008 financial crisis and the likelihood that price inflation indexes will show strong acceleration once oil prices stop falling, there is a strong possibility that the July 2012 low in interest rates was indeed a significant bottom and that rates are now in the early stages of a multi-year climb.


  1. When you say bottomed in 2012, by the same measure, one could rightly say they topped in the 2nd half of 2014. 2 or 3 years on a 50 year chart is more like noise than something significant. The trend is still down. Maybe if rates get above their 08 highs- (the announcement of ZIRP), then we will know the long downtrend in interest rates has been halted.

    And if bonds are bought by the fed after it prints money, then how do we know there isn't a giant fed thumb pushing rates lower than they otherwise would be without cb bond buying? For all I know its just another phony market rigged from the get go, can we trust its price signaling?

  2. They are definitely staying low this year.

  3. Where in my hyperinflation Wenzel? Austrian "theory" tells us money printing should be result in *increasing* interest rates, and you keep telling us about all this "money printing". At what point do you stop and say, wow, something must be wrong about my theory? The answer is never: when you have a religious belief, no amount of data will ever shift your opinion.

    1. First of all, I have never predicted hyperinflation. And secondly, Austrian School business cycle theory is a lot richer theory than the strawman theory you have created. If you really want to understand what is going on, subscribe to the EPJ Daily Alert. It will clear up your erroneous thoughts and conclusions.