Friday, June 10, 2016

The Radioactive Treasury Bond

Data that is growing exponentially at a constant rate will appear as a straight line when plotted on a log chart. If the line is sloping upwards, then that's positive exponential growth. If the line is sloping downwards, then that's exponential decay. That's really all you need to know to understand the following chart showing the natural log of the 30-year Treasury bond yield.

Click to enlarge.

Oh, look. The 30-year Treasury bond yield continues to exponentially decay just like plutonium in a nuclear warhead. In fact, we're currently even a bit below trend. That's bonus decay for those keeping track at home! Isn't it wonderful?

Here's even more good news though. Should the trend continue, even in this "rising" interest rate environment, there will always be a little bit of radioactive yield left for savers to feast on. Take Japan, for example. Their 30-year Treasury still yields 0.261%. Fantastic news for long-term savers!

So optimistic about the future I am. Bring on the radiation! Our strong and resilient economy, and its many underfunded pension plans, can take it. The Fed has permanently put a stop to all future recessions. And the best part? No unintended consequences. Woohoo!

When it comes to reliable long-term investments in this modern and innovative financial world, can there really ever be too much sarcasm? I think not!

Source Data:
St. Louis Fed: Custom Chart


dearieme said...

It's been a while since you posted one of your excellent "exponential trend failure" graphs.

Stagflationary Mark said...


Unfortunately, I might die of old age before this trend fails. Sigh.

Not predicting it. Just saying it's a possibility.