Tuesday, June 9, 2009

US long rates - still rising

Here is another look at US long term treasury bond yields. Its the same story; yields are rising.

This is classic fiscal crowding out. The government borrows heavily, and pushes up interest rates. Private sector investment falls, leaving the economy with a big government and a larger public sector debt stock.

4 comments:

  1. so we are quickly moving from "if" there will be a bond-market dislocation in the US to "when" does the BMD takes place?

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  2. " This is classic fiscal crowding out."


    This is classic selective presentation of data. Show a long term chart.

    Also, what private investment, exactly, is the government borrowing crowding out? Note that there is a glut of houses, condos, hotels, shopping malls, office space, registered vehicles, car dealers, and auto manufacturing in the US. Business equipment investment has been falling since 2006 - and interest rates have been low over that time period - so US businesses don't seem to see much growth potential.

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  3. > so US businesses don't seem to see much growth potential.

    So why does the government?

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  4. Higher interest rates in the long bond are reflected in higher mortgage rates which is DDT to the green shoots.

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