Monday, August 23, 2010

10 Year Treasury Peaks at 15.68 Percent, Trends


The Ten Year Treasury note peaked at an all time high yield on September 25, 1981 at 15.68 percent. The yield has been falling since that peak. For more than 29 years.....
By Bob DeMarco
All American Investor


The Ten Year Treasury chart below ranges from August 17, 1979 to August 17, 1983.

The peak interest rate occurred on September 25, 1981 at 15.68 percent.


The following Ten Year Treasury chart starts on May 5, 1981 and ends on August 17, 2010.


The long term 30 year downtrend in ten year interest rates is obvious.

I am remembering back in 1980 - 1982 how the Fed tried to ring out inflation and caused a major boomerang down and then back up in interest rates.

Everyone was convinced that rates where going to continue going up and up. Even the best economist.

It is always best to follow the trend. However, does the reward of owning bonds down here really equal the risk? I doubt it.

Once the trend turns rates will start to rise slowly and then fast.

A look at history is always instructive.

Right now, I think short ten years could end up being the trade of the decade. However, there will be plenty of time to get short once the trend of lower interest rates reverses.


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Original content Bob DeMarco, All American Investor