Apr 06

10 Year Treasury Note in Focus

Posted by Kristjan Velbri | Posted in Economy | Posted on 06-04-2010

During the past couple of months I’ve been really busy studying and going through my Statistics 101 course notes to figure out how to make all the things taught in class work for the benefit of my portfolio. So far it has been an interesting journey. Unfortunately, there are only 24 hours in a day and thus I’ve been unable to find the time to update my blog. Much has happened since I last posted. Among many other things, visible cracks are beginning to appear in the bond market with news out that the US Treasury has been having trouble selling debt. Since time is of the essence for both you and me, I won’t bother going into the fundamental details of why the Treasury is having trouble, especially as the economic and financial problems of the US are well-known anyway. Nonetheless, I would like to present to you a chart of where interest rates are going. What is the effect of higher interest rates? Lower earnings, weak or no housing recovery, higher debt payments for both the public and private sector even bankruptcies. All in all, even though the US economy is showing signs of a robust recovery, the future doesn’t look too bright. Throw growing government expenses, higher taxes, rising demand combined with a flat-lining supply of oil into the mix and you have the ingredients for another economic meltdown in the US at or around 2012-2014. Whatever the US does right now better be geared toward preparing for the future. There are some signs of this happening, but unfortunately, only on the margin.

$TNX

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