S&P 500 composite vs US 10 yr yield to 1791 (Logarithmic Chart)
Click to enlarge

Source: Global Financial Data


Have a look above at the visual “Boom Bust nature” that the markets, with a little help fromt he Fed and Human Psychology — helps to create. If we overlaid a chart of volatilty, we would see huge spikes every 5 or so years.

It is worth noting the major bubble of the Equity side: 1929 post WW1 bubble, 1996-2000 tech bubble, 2003-07 credit bubble, olus whatever the hell you want to call the current QE driven thingie.

Critiques of Central Bank intervention do not have a whole lot of work to do to place much blame on the Fed for these last 3 boom & bust cycles.



Ralph M Dillon (rdillon@globalfinancialdata.com)
Global Financial Data

Category: Fixed Income/Interest Rates, Investing, Think Tank

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

8 Responses to “S&P 500 vs US 10 Year Yield to 1791”

  1. Petey Wheatstraw says:

    “the current QE driven thingie” is exactly what we should call it.

    • Angryman1 says:

      QE doesn’t drive much at this level.

      The bigger factor is lust for US securities. There is so much demand, QE theoretically, could drive interest rates higher if bought in huge numbers(which isn’t close to happening). Sorta “dirties” the milk. Hence, they want higher US debt in the release of more securities or the FED to buy up enough assets that it reverses the flight to safety and they move into higher risk premiums.

      Notice how the US had high interest rates up to the Civil War. The post-CW era gave the country a much needed “respect” despite the modest growth to population numbers. I guess we can thank Lincoln for that.

      Now with Europe in ravages(again), the US is everybody’s friend again.

  2. Concerned Neighbour says:

    Evidence such as this makes it all the more amusing when Fed officials assure us that there are no signs of “irrational” activity in the markets. Their track record of recognizing bubbles is absolutely atrocious, and now they’re seemingly committed to never allowing any asset price to fall ever again. Never mind that corporate earnings are actually down this quarter. Never mind that economic data keeps coming in worse than expected. All of this is positive in the “rational” franken-market these central banks have created.

  3. ottnott says:

    On the other hand, critics of the very existence of the Fed need to consider the density of dark gray bars in the pre-Depression era. A powerful central bank with a willingness to act is a fine tool to have at hand.

    Now we just have to keep Ayn Rand acolytes away from the helm, end our representatives’ nasty habit of auctioning off the right to write legislation, and procure a horse for each beggar and we will have smooth sailing.

    • Estragon says:

      The existence of a powerful central bank may be one factor in the density of gray bars, but I’d suggest the changing structure of the US economy was a larger factor. Much of the developed world was devastated in WW2, which accelerated the relative decline in importance of agriculture and the rapid expansion of manufacturing in the US.

  4. boveri says:

    Looks like a great chart. Too bad I haven’t the foggiest what it says.

  5. Angryman1 says:

    Even though people think today is worse, I think the mid-70′s/early 80′s period was way more scarier, at least from a emotional pov.

    The mid-70′s/early 80′s era was a era when you wondered where society was going. The cultural collapse of puritanism, the end of the post-war boom, Nixon’s rapid release from Bretton Woods. There was a real feeling of doom. Interest rates really focused on that.

    This just feels more like a hangover after a party, with the hangover part ending for alot of America(my backyard for a year at least). The next party is gonna get started.

  6. [...] Long term chart: S&P 500 vs US 10y Treasury Yield (1791-2013) | Global Financial Data “Critics of Central Bank intervention do not have a whole lot of work to do to place much blame on the Fed for these last 3 boom & bust cycles.” Notice huge spikes in volatility about every 5 years & the reflexive response of falling yields that aren’t reversed. $SPX $TNX #Disinflation [...]