Inquiring minds want to know: What is up with Yields ?

Yesterday, Seabreeze Partners fund manager Doug Kass sent me a Bloomberg chart showing the 20 lowest developed nations’ 10 year bond yield.

Astonishingly, the United States is number 16.  The US Treasury 10 year bond yields a little better more than Norway (#15), but a little less than Spain (#17).

I am not sure exactly what this means, but it is worthy of further study and analysis.

Continues here

Category: Fixed Income/Interest Rates

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.

9 Responses to “It’s a Low, Low, Low, Low, Rate World”

  1. wisegrowth says:

    Barry,
    Look a little closer and you will see something interesting.
    Hong Kong is rising (Singapore a little) while most of the others have been falling. Money is leaving China. It might be possible that the rich are escaping from China as we speak. Consumption of luxury goods in Hong Kong have dropped a lot recently.
    I just wrote about this on Angry Bear…
    http://angrybearblog.com/2014/06/we-need-to-keep-our-eyes-on-china-at-the-moment.html

  2. farmera1 says:

    Here’s my thoughts from down on the farm.

    The perfect storm has destroyed wages and the standard of living for US workers and I suspect for Western Industrialized workers in general.
    No increase in wages, no inflation (per the FED). No inflation low interest rates.

    Wages are being pressured on all sides leaving labor with no pricing power;

    -technology, replacing humans

    -globalization, American workers are heading (if we aren’t there yet) towards a world where all workers of the world are in one market so US workers are in head to head competition with workers from say Mexico, China, India,
    Taiwan etc. Just happens that the other countries started from a low wage base and US labor and other industrialized countries are catching up

    -the spoils of productivity improvements are going to capital not labor and hence by the FEDs definition there is no inflation

    -capital markets are all connected, there is no place to escape from this downward spiral of decreasing purchase power of labor

    -with loss of pricing power and increasingly hostile governments unions are a thing of the past. workers have no choice in the matter, they will take what ever is offered

    Comment: The FED published a white paper a number of years ago explaining why if there is no increase in wages, there is no inflation. They were using it at the time to explain why there was no inflation even though prices were increasing for food, energy and housing. Not sure I understood or agreed, but that is what the FED maintained. By the FEDs definition we are already in a deflation cycle and hence super low interest rates. It all makes sense to me from my seat on the tractor.

    • CDizzle says:

      BINGO.

    • noncist says:

      Your ideas are intriguing to me and I wish to subscribe to your newsletter.

      • farmera1 says:

        No newsletter to sell but I will give you a ride on my tractor for free. Crops are looking good and we are getting nice Spring rains in this part of the world. Another year, another crop and who cares what happens after that. Fat, dumb and happy seems to be the way to go. No worries mate.

  3. [...] Barry Ritholtz has a post showing that rates are very low in many countries. [...]

  4. noncist says:

    Plenty of rich people and corporations (oh wait, those are the same thing?) looking for safe places to stash earnings and little of this new money is actually getting circulated. The result? Low inflation and low bond yields.

    If I recall, one of the major reasons for the Fed to purchase bonds was to lower yields and push other investors into riskier assets that would stimulate the economy more. Now the ECB is doing the same thing with European bonds. There is effectively a ceiling on bond yields, because lots of risk averse money is waiting in the wings for bonds if and when central banks decrease their buying.

    The same effect that inflates P/E over time (more money hunting fewer investment opportunities) should deflate treasury yields.