Wednesday, April 08, 2009

30 Year Treasury in Perspective (Graph)

The 30 Year Treasury Constant Maturity.

30 Year Treasury Constant 407

  • Unless you are over 50 years old, it is probably hard to believe that the 30 year Treasury bond traded above 15 percent.
  • In 1982, you could have bought a $1,000,000 Treasury zero coupon bond for $15,000. This allowed you to lock in a compounded interest rate of 15 percent for 30 years. Imagine investing $15,000 of your IRA or 401K and watching it grow, risk free, to $1,000,000.
  • Recently, the 30 year spiked down to the 2.50 percent area and right back to the 3.50 percent area.
  • The low yield for the long term treasury bond is in, and rates should begin to move higher soon.
  • Interest rate trends tend to persist. They tend to last for long periods of time.
  • The spike low in the 2.50 area on the long bond is evidence of a final extreme in long term rates.
  • Interest rates tend to go to an extreme when making a high or a low.
Yields on actively traded non-inflation-indexed issues adjusted to constant maturities. The 30-year Treasury constant maturity series was discontinued on February 18, 2002, and reintroduced on February 9, 2006.
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Bob DeMarco is a citizen journalist and twenty year Wall Street veteran. Bob has written more than 500 articles with more than 11,000 links to his work on the Internet. Content from All American Investor has been syndicated on Reuters, the Wall Street Journal, Fox News, Pluck, Blog Critics, and a growing list of newspaper websites. Bob is actively seeking syndication and writing assignments.

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