• 681 days Will The ECB Continue To Hike Rates?
  • 681 days Forbes: Aramco Remains Largest Company In The Middle East
  • 683 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,083 days Could Crypto Overtake Traditional Investment?
  • 1,088 days Americans Still Quitting Jobs At Record Pace
  • 1,089 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,093 days Is The Dollar Too Strong?
  • 1,093 days Big Tech Disappoints Investors on Earnings Calls
  • 1,094 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,095 days China Is Quietly Trying To Distance Itself From Russia
  • 1,096 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,100 days Crypto Investors Won Big In 2021
  • 1,100 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,101 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,103 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,104 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,107 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,108 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,108 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,110 days Are NFTs About To Take Over Gaming?
Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

  1. Home
  2. Markets
  3. Other

Interest Rates Spiking Everywhere

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.

 

Back to homepage

Leave a comment

Leave a comment