Saturday, March 15, 2014

Long-Term Interest Rates: Sliding Into Japan

The following chart shows the annual average interest rate spread between long-term government bond yields for Japan and long-term government bond yields for the United States.


Click to enlarge.

Three Observations:

1. The overall trend is down. Big shocker.
2. We get relatively higher yields at the peak of bubbles.
3. Relatively higher yields pop bubbles.

This is not investment advice.

Source Data:
St. Louis Fed: Custom Chart
at

5 comments:

  1. TroyMarch 15, 2014 at 4:15 PM

    http://research.stlouisfed.org/fred2/graph/?g=t7M

    blue is systemic debt leverage (ex-TBTF), down is deeper in the hole.

    red is rates (right axis)

    A break to the upside is inconceivable, not without a 1970s-scale dose of wage inflation.

    http://research.stlouisfed.org/fred2/graph/?g=t7N

    shows nominal wages doubled, 1970-1980 (and that was what the Volcker Fed was fighting, until they gave up as the 1984 election neared).

    Wages doubled again, 1980-2000.

    And are up 50%, 2000-now, but, alas, we've got about 10M workers age 15-64 sitting around waiting for a job to appear for them.

    Me, I'm moving to Tokyo next year. The Olympics should bring mucho work there, LOL.

    ReplyDelete
  2. Stagflationary MarkMarch 15, 2014 at 6:11 PM

    Troy,

    A break to the upside is inconceivable, not without a 1970s-scale dose of wage inflation.

    Agreed.

    I think the odds of a 1970s-scale dose of wage inflation are low (to put it mildly).

    ReplyDelete
  3. TroyMarch 16, 2014 at 9:48 PM

    Just read the factory wage in Tijuana is ~$400/mo. Workers at Foxconn make more than that, sigh.

    6M jobs gone since 1990 and ain't coming back.

    http://research.stlouisfed.org/fred2/series/MANEMP

    The path of least resistance to "save" the system is MMT. I don't see how our politics avoids this road, but I can not see where this road will take us, either.

    MMT is the golden goose that gives the Dems social spending increases and the GOP their tax cuts.

    Not sure what will kill it, either, sigh, since every problem it creates will give the politicians more to do.

    ReplyDelete
  4. Stagflationary MarkMarch 17, 2014 at 5:08 AM

    Troy,

    6M jobs gone since 1990 and ain't coming back.

    I just can't help thinking that the "infection" is spreading.

    I'm considering buying another video game for my PS3. If I do, I'll be making the purchase directly through the Playstation store.

    No driving down to the mall. No auto maintenance needed. No gasoline used. No stop at a restaurant for a snack. No salesperson required.

    Seems fairly deflationary to me.

    *shrug shoulders*

    ReplyDelete
  5. Stagflationary MarkMarch 17, 2014 at 5:15 AM

    Oops. Forgot one. I should add that by buying it through the Playstation store...

    No delivery person shows up at my front door.

    ReplyDelete