Monday, December 23, 2013

Rising Interest Rates: A Long-Term Saver's Perspective

The following chart shows the natural log of the 10-year treasury yield. When using natural logs, exponential growth is seen as a straight line.

Click to enlarge.

We've actually clawed our way back to the middle of the long-term declining trend channel. Hurray.

The 10-year yield is destined to climb up well outside of that miserable channel soon thanks to our financially innovative, modern, improved, strong, robust, and resilient economy. There are just four things we need to see first.

1. The End of ZIRP
2. Skyrocketing 5-Year CD Rates
3. Hot Snowballs
4. Avian Pigs

I could be wrong of course. Perhaps we'll get pork hot dogs at 50% off and flying snowballs instead. What a Christmas that would be!

December 23, 2013
Procrastinators may be rewarded

Abercrombie & Fitch: Fifty percent off the entire store.

Don't forget to load up on Abercrombie & Fitch stock too! 50% off! It's all a part of their long-term plan to be financially innovative, modern, improved, strong, robust, and resilient! Pillar of retail strength!

December 23, 2013
Dark Side of After-Christmas Sales Starting BEFORE Christmas

As some consumers jubilantly hop from store-to-store reaping the benefits of these price-slashing events, I suspect that there may be a hangover waiting.

You think? This is not investment advice.

Source Data:
St. Louis Fed: Custom Chart


Rob Dawg said...

No five days of last moment pull forward in calendar year due to tax consequences this year.

Stagflationary Mark said...

I was tempted to post a heavyweight lifting fail compilation to represent the epic long-term struggle for higher interest rates.

Several of the clips may have scarred me for life though. There are just some things that one cannot unsee. Ouch.

Troy said...

per-worker real consumer + USG debt

Prior to the baby boom arrival into "30 Something"-hood, debt was $60,000 per worker bee.

We doubled that in the 1984-1994 period, and we damn near doubled it again 2000-2010.

Higher it goes, the lower the interest rates have to go. This is something nobody understands all that well.

Yesterday I was reading good ol' Victor Davis Hanson's opinions on the unsustainable debt:

"When interest rates creep up, the cost of servicing the national debt may claim one-third of the yearly federal budget."

and laughed.

Stagflationary Mark said...


Higher it goes, the lower the interest rates have to go. This is something nobody understands all that well.

I think we both seem to understand it. And there are a handful of others too that I know of! So we've got that going for us, which is nice. ;)

Still patiently waiting on Jeremy Siegel's mythical 3.5% real yields though! Okay, not really waiting at all come to think of it. Never mind.

July 26, 2011
The Real Math Behind Siegel's Mythical 3.5% Real Yields

Contrary to the opinion of Jeremy Siegel, clearly the era of 3.5% real yields is over. I have bet and continue to bet nearly all that I have that I am right on this and that he is wrong.

Heaven help us all if he ever gets the yields he expects. Seriously. I'm not a religious person, but heaven help us all.

Stagflationary Mark said...


I didn't reply to your earlier comments (other things came up) but I did eventually read through all your links.

I was reminded of Robert Heinlein's quote!

“Never try to teach a pig to sing; it wastes your time and it annoys the pig.”