Wednesday, February 17, 2021


The following chart shows the natural log of the 30-year Treasury yield. On a log chart, exponential growth (or decay)) is seen as a straight line.

If the long-term exponential decay of the 30-year Treasury bond yield (in red) continues, then the current rise in the yield should max out at no more than roughly 3.2%.

As seen in the yellow line, the long-term trend (in red) and the short-term trend (in green) meet at about 1.17.

e1.17 = 3.2

Declaring that the long-term bull market in long-term Treasuries is over while the natural log of the yield is well below the red trend line seems more than a bit premature to me. Where's the evidence of the bull market's demise?

So, now we wait. Will the line in the sand hold at 3.2%? I think it will but I wouldn't bet my life on it. If it does not hold, things are going to get very interesting. And when I say interesting, I actually mean terrifying. I don't think that our increasingly leveraged consumer society would know how to cope with mortgage rates that no longer fall over the long-term.

Our increasingly leveraged consumer society isn't a bug. It's a feature. It's buy design. (Pun intended.)


  1. Hey Mark, remember all those times we (ok, I) joked about filling your Costco trash bag hoard with nat gas. Hahaha. Good times.

    On a long enough time line every bad joke becomes reality.

  2. You mentioned that which must not be named!

    Bad Jokes

    Patient: This tea is really hard to swallow.
    Doctor: Is it reality?


    Patient: No, I get a stabbing pain in my right eye every time I try to drink it.
    Doctor: Take the spoon out first.

    Badum-ching. :)