 |
2016-02-22 03:57:00 How long are you ●●●●●●ng to stay here? ●●●●●●prost for sale no ●●●●●● Using month-end data from J●●●●●● 1970 ●●●●●●h June of this year (two data ●●●●●● were ●●●●●●lable, those for March 1972 and May 1976), the ●●●●●●, or yield ●●●●●●ence, ●●●●●●n 3-month T-bills and 10-year T●●●●●●ies has only been ●●●●●●r than 4% on two ●●●●●●ons and it has ●●●●●●lly been ●●●●●● 1.50%. As this is being ●●●●●●n, it is 2.78% (Chart 1). While the Fed is ●●●●●● ●●●●●● to taper its bond ●●●●●●ses in the ●●●●●●ate ●●●●●● and may even end them next year, the ●●●●●●ility of the Fed ●●●●●●g its ●●●●●● rate, ●●●●●●tly at 0%, prior to the end of next year is ●●●●●●ely low. We would ●●●●●●t that it is ●●●●●●ly prior to 2015 and PIMCO has ●●●●●●ted it might not occur until 2016. As such, short-term rates are ●●●●●● to ●●●●●● ●●●●●●ely low over the next two years. The ●●●●●● ●●●●●● ●●●●●●n 3-month T-bills and the 10-year bond ●●●●●●ed in the 3rd ●●●●●●r of 1982, as short rates ●●●●●●d from ●●●●●● highs as Fed C●●●●●●n Paul V●●●●●●'s ●●●●●●ning ●●●●●●gn began to bring ●●●●●●ion under ●●●●●●l (Chart 2). With the 3-month T-Bill ●●●●●●tly at 0.05%, we can ●●●●●● rule out a large ●●●●●●e in short rates that will push the ●●●●●● ●●●●●●. That means to push the ●●●●●● to 4% we would need the yield on the 10-year bond to rise just north of 4%. It's hard to see what would push the 10-year yield north of 4%. I●●●●●●on ●●●●●●s well ●●●●●●ed as the ●●●●●●ty of money is ●●●●●●ely low, with most of the money the Fed has ●●●●●●d ●●●●●●ing ●●●●●●ted at the Fed in the form of ●●●●●● bank ●●●●●●es. More than 82% of the US money ●●●●●● was on ●●●●●●t with the Fed as of the end of July. From J●●●●●● of 1959 ●●●●●●h the end of 2007, the ●●●●●●e was just 6.18%. E●●●●●●c ●●●●●● ●●●●●●s weak with the ●●●●●● in each of the last three ●●●●●●rs below 2% on an ●●●●●●ized basis. I●●●●●●ntly, even as the Fed ●●●●●●, ●●●●●●ing ●●●●●● ●●●●●●ts will lead to ●●●●●●d debt ●●●●●●ce and the Fed's ●●●●●●ses are ●●●●●● to ●●●●●● a ●●●●●●vely ●●●●●●tent ●●●●●●tage of ●●●●●●ce over the next six to 12 ●●●●●●. F●●●●●●, from 2004 ●●●●●●h 2006, when the US ●●●●●●y was in ●●●●●●●●●●●●y ●●●●●● ●●●●●●ion than it is ●●●●●●tly, the ●●●●●●e yield on the 10-year T●●●●●●y was just about 4.50%. |