Wednesday, March 18, 2015

ZIRPrising Interest Rate Environment

There's a 2.51% yield on the 30-year treasury bond as I type this.

This must be SURPrising for those who thought long-term interest rates must rise when the Fed shifted its stance to impatience.

As I've said many times before, they can pry the long-term inflation protected treasury bonds and I-bonds from my cold dead fingers. I bought with intent to hold to maturity and the plan continues.

Those sitting at the short end of the curve salivating over higher interest rates could use an extra pitcher of Kool-Aid right about now. Might just as well be waiting for unicorns too while they are at it. Seriously.

Need I really link to the plethora of mainstream media advice telling investors to avoid long-term bonds like the plague? Well, it's a market. For every seller there must be a buyer. I certainly wasn't the only one buying.

All we know for sure is that the mainstream media generally wasn't buying. And if they weren't buying all these years then they can't really be selling either. You can't sell what you don't have. So if they can't sell and I won't, then who is? The answer might be close to a big fat nobody. Just something to think about.

This is not investment advice.


Rob Dawg said...

I am constantly amused by people who think the Fed sets rates rather than responds to the rate environment.

Stagflationary Mark said...

The market follows the Fed which follows the market following the Fed following the market. Economic stability, baby. That's what I'm talking about.

Or the perfect environment for economic tank slappin' and feedback loops of unintended consequences!

You make the call. ;)