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%.


dd said...

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

Unknown said...

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