Interest Rates Spiking Everywhere

By: John Rubino | Mon, May 18, 2015
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Just as ultra-low interest rates start to seem normal, the markets decide otherwise. US 10-year Treasury bonds yielded about 1.9% in April and are now above 2.20%:

Interest rate US 10 year May 2015

And the trend reversal isn't limited to the US. Across Europe and Asia rates have spiked in the past month. From Bloomberg:

Interest rates worldwide May 2015

What does this mean? Several things, potentially:

  1. Markets tend to reverse when everyone finally accepts that the dominant trend is going to continue. This could be one of those times, as negative rates came to be accepted as inevitable and (for a growing number of deluded statists) actually good, leading traders to anticipate more of the same. In other words, the trade got too crowded.

  2. Investors might be losing faith in governments' ability to maintain the value of even strong currencies like the dollar and Swiss franc, which would make negative-yield bonds double losers. To which one can only respond, "really, you just figured that out??"

  3. All the talk of making cash illegal led a critical mass of people to consider the implications and conclude that such a world is not one in which they want to live.

  4. It means nothing, just a hiccup in a dominant secular trend that will take interest rates into sharply negative territory world-wide and result in a cashless society where central banks have unfettered ability to peg interest rates, equity prices and pretty much everything else wherever they want.

 


 

John Rubino

Author: John Rubino

John Rubino
DollarCollapse.com

John Rubino

John Rubino edits DollarCollapse.com and has authored or co-authored five books, including The Money Bubble: What To Do Before It Pops, Clean Money: Picking Winners in the Green Tech Boom, The Collapse of the Dollar and How to Profit From It, and How to Profit from the Coming Real Estate Bust. After earning a Finance MBA from New York University, he spent the 1980s on Wall Street, as a currency trader, equity analyst and junk bond analyst. During the 1990s he was a featured columnist with TheStreet.com and a frequent contributor to Individual Investor, Online Investor, and Consumers Digest, among many other publications. He now writes for CFA Magazine.

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