Interest Rates

The yield curve is a picture of how much interest the U.S. government has to pay to borrow money over different periods of time. These loans can vary from just a few months to several decades. Typically, the rates rise as the time horizon for repayment increases. But that is not always the case.

The yield curve is a picture of how much interest the U.S. government has to pay to borrow money over different periods of time. These loans can vary from just a few months to several decades. Typically, the rates rise as the time horizon for repayment increases. But that is not always the case.

For you kids out there who may be too young to remember ancient American history, please allow me a moment to turn back to the days when Arkansan Bill Clinton was president. It was toward the end of the last century when he asked, “You mean to tell me that the success of the economic program and my re-election hinges on the Federal Reserve and a bunch of f***ing bond traders?”

This was potentially a telling week for interest rates in America on the extreme ends of the yield curve. Way out on the right of the curve is the 30-year treasury bond. Its yield is what lenders to the American government can expect to be paid for the long-term loan. It reached 5.18% earlier this week, the highest level since 2006 (see chart above).

Markets like stability whether its economic, geopolitical or otherwise.  Stability helps buyers and sellers agree on the current and potential future values of a variety of financial and real estate assets, thus driving their prices.  As stability wanes, the spectrum of expected outcomes stretches, inviting a broader range of opinions about potential future values.

Jury duty is a civic responsibility where citizens are randomly selected to serve as jurors in legal trials.  Having served as a jury foreman about a decade ago, I can attest to the deliberative process Americans are fortunate to have when considering the facts of important moments in the lives of the parties involved in a case.  As of this writing, I just finished my day of jury duty

Vigilantes are not something one ties to the boring old bond market very often.  However, a well-known economist, Ed Yardini, coined the term back in the 1980s when bond market investors protested against what they perceived as inflationary or fiscally irresponsible government policies.  They could be causing a stir once again. 

Breakup songs that make their way into pop culture have a way of staying relevant by transcending time and touching the hearts of generations.  Who can listen to Etta James sing “I’d Rather Go Blind” and not feel the pain of losing the one you love?  Who can resist singing along with the Righteous Brothers whe

Interest rates are crucial to economic activity.  They impact the costs and therefore the incentives of financing the three pillars of the American economy: consumption, investment, and government spending.  Borrowing is done over various durations, from short to long.  Costs of loans are typically found on a menu known as a yield curve.

“Move fast and break things” was the motto Facebook founder Mark Zuckerberg created to describe the characteristic of processes he wanted implemented at the company.