Some Perspective on the "Rising" Interest Rate Environment

The following chart shows the 10-year moving average of the 10-year treasury yield.


Click to enlarge.

Rising interest rates? In my opinion, the bond market is simply trying to climb back to the long-term declining trend.

Long time readers know that I post a lot of exponential trend failures on this blog. You might therefore wonder why I trust this one not to fail. The simple answer is that I don't. It's more of a question of which direction it would fail.

I am definitely in the minority. As seen in the chart, we're currently well below trend. I do not believe this economy is strong enough to support a sustained climb back up.

This chart predicts that the 10-year moving average of the 10-year treasury yield will be 3.0% in August of 2018. That's roughly 5 years away. I shall take the under.

It's just an opinion of course.

Opinion has caused more trouble on this little earth than plagues or earthquakes. - Voltaire

My opinion isn't going to do much in the grand scheme of things. If I am wrong, no big deal. I'm in the minority here. Who cares what I think? It is the opinion of the masses, those in ivory towers, and those in power that would concern Voltaire most more than likely.

September 3, 2013
5 ways to prepare for higher interest rates

If you don’t like the idea of buying individual bonds but don’t want to get burned by raising rates, short-term bond funds are an alternative.

Yes, short-term bond funds! It's worked out great so far. Just get in there and patiently wait for the end of ZIRP. It is bound to happen any day now!

Yahoo: SHY Performance

3-Year Total Return (Mkt): 0.56%

This is not investment advice.

Source Data:
St. Louis Fed: 10-Year Treasury Yield