Friday, June 15, 2007

Interest Rates



In this morning's New York Times there is an above the fold, front page article about interest rates. It's headed : "Rising Rates Start to Squeeze Consumers and Companies". As you know I think it is generally good investment policy to fade the New York Times. So I take this article as confirming evidence that the bond market has made a temporary low in price and high in yield.
I think that over the next few weeks the yield on the 10 year US treasury note will drop to 5.00% or so. Then I think we shall see another rally in yields that will take the market to the 5.50% level.
The second chart you see above this post is a weekly chart of 10 year note yields going back to the 2003 low at 3.07%. Since the 2003 low we have seen a rally in yields lasting more than 4 years. I think that once the market prints a 5.50% yield a bull market in bonds will begin and last 12-18 months. During that time I expect to see the 10 year yield drop to about 4.00%.

2 comments:

dolores said...

Thank you for sharing your insights. It's much appreciated.

p said...

Carl, I learned about your work from our members at ptrades.com (a commodity futures community founded by me and karel baloun the famous first senior engineer from FACEBOOK) and my specialty brokerage operation called oilgasfutures.com, the clients have been raving about your stuff, i've looked it over and absolutely love it, we're taking ptrades.com onto the FACEBOOK platform this week! anyway keep up the great work!!!! Patrick Kerr