The importance of today’s closing yield in the 10 yr
By Peter Boockvar - June 23rd, 2010, 4:00PM
To put today’s 10 yr note yield of 3.11% into perspective and its huge relevance, taking out the sharp drop in interest rates in late ’08, early ’09 due to the obvious financial collapse fear flight to safety trade, the last time the 10 yr bond yield closed at 3.11% was on June 13th, 2003, almost two weeks before Greenspan cut rates to 1% due to the Fed’s deflation fears. The closing low on that date at the time was a record low dating back to at least 1962 and was only first breached in Nov ’08. The level also came 7 months after Bernanke gave his famous “Deflation: Making sure ‘it’ Doesn’t Happen Here” speech where he talked about dropping money from a helicopter if need be.
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June 23rd, 2010 at 4:15 pm
Where does it end and when does the new Bolshevik Revolution begin?
June 23rd, 2010 at 5:02 pm
I used to think you could print your way out of deflation. Not anymore, not in the short run. Maybe in the long run, but that would probably ultimately yield hyper-inflation. Now, I think every turn of the presses can be met with a decline in velocity until all the printing in the world just leaves things not as flat as they otherwise would have been. That’s Japan’s experience. It appears we need to quit looking at this thing as a mini-repeat of the Great Depression, and look at it as a deflationary contagion that started in Japan. Demographics are important too.
June 23rd, 2010 at 6:36 pm
I nominate “Demographics are important too” as the understatement of the day.