Tuesday, April 07, 2009

Ten Year Treasury Perspective (Chart)

Ten Year Treasyry 406

  • Every time I look at this chart I think about 1978-82.
  • During that period it was not unusual to watch the 3 month Treasury bill move 50 basis points in a day.
  • On a slow day the trading range in the Ten Year was a point and one-half.
  • Interest Rates on the Ten Year Treasury rose over 15 percent. Mortgage rates also moved above 15 percent.
  • Everyone was so bearish they wouldn't touch the Ten Year or Long Bond.
  • I continue to ask myself, will we see double digit ten year Treasury rates again?
  • The obvious answer is, YES.
  • Flash forward 30 years.
  • The Ten Year is trading at 2.91 percent. Will rates ever go up?
  • It looks like the Ten Year is making a low in this area.
  • A close above 3.125 percent would indicate higher interest rates and a trend change.
  • I learned a long time ago that trends start when you least expect them.
  • Once a trend starts it tends to persist for a long time.
  • One thing I know for sure -- rates always go a lot lower, and a lot higher than you could have ever expected--at the extremes.
  • Investors should be thinking about ways to take advantage of increases in interest rates.
  • Once rates start up they should do so for many years.
Subscribe to All American Investor via Email
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.