I was looking at the yield curve this morning on US Bonds and something looked odd. The yield on the 3 month is lower than the 10 year. In a normal economics class, nothing may seem wrong with this situation, but in the recent "magical inverted yield curve land" that we have been residing in, it is something different. With the exception of the 2-year, all the maturities seem to be lining up in an orderly rising fashion. Unfortunately, the un-inversion (normalization) has come at the expense of the 10 year increasing faster than the is 3 mo decreasing. Why do all good things come to an end? Because some good things can't defy the theories of economics forever.
In a perfect world, why would anyone want to risk having their money locked up for 10 years when they could only have to put up their money for 3 months PLUS get more change back in the end. Their is little incentive for long-term investment (except for sound financial planning). I think we are one step closer to finding out way out of interest rate mania. Hopefully we can start focusing on company fundamentals as opposed to moving the ENTIRE market based on interest rate hopes.
Subscribe to:
Post Comments (Atom)
2 comments:
Gostei muito desse post e seu blog é muito interessante, vou passar por aqui sempre =) Depois dá uma passada lá no meu site, que é sobre o CresceNet, espero que goste. O endereço dele é http://www.provedorcrescenet.com . Um abraço.
Hello. This post is likeable, and your blog is very interesting, congratulations :-). I will add in my blogroll =). If possible gives a last there on my blog, it is about the TV de LCD, I hope you enjoy. The address is http://tv-lcd.blogspot.com. A hug.
Post a Comment