I spent a decade of my life hip deep in the bond markets, trading all sorts of paper and designing portfolios for clients, and I still find the fixed income world very interesting.
One of the most important reference rates for the bond market (as well as the stock market, the mortgage market, the commodities markets, etc) is the 10 year yield on the US Treasury bond. Here's a look at that rate over the last 5 years:
While the number bounced around a good bit over that time, from the low 4% range down to just below 1.5%, the trend definitely seems to be steadily lower. Below the fold, I push the chart back to cover the last 20 years.
Here the range of rates is much wider, from as high as 8% all the down to that recent low of ~ 1.5%, and again the overall trend seems to point to a trend to lower rates. In fact, if we max out the available data on YCharts for the 10 year treasury rate back the early 1960s, the trend to lower rates seems to have begun in the 1980s after a 20+ year trend in the opposite direction:
So, are there things to take away from these charts and the patterns they may suggest? Is there wisdom here about how to position for the next 5, 10, or 20 years?
My opinions reflect my bias, but I do think there are some interesting talking points readily available from the 10 year rate and it's history:
David R Wattenbarger, president of DRW Financial
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