The Wealth Code - How the Rich Stay Rich in Good Times and Bad 2010 Finalist: Independent Book Awards - Personal Finance
The Canary in the Coal Mine. 03/26/2010
Yields on 10-year notes rose 2 basis points, or 0.02%, to 3.90%. Last June, they peaked at 3.94%, which was the highest since October 2008, when the credit crisis really took off and sent yields to all-time lows. From Bloomberg 3-26-10 Former Federal Reserve Chairman Alan Greenspan said the recent rise in Treasury yields represents a “canary in the mine” that may signal further gains in interest rates. Higher yields reflect investor concerns over “this huge overhang of federal debt which we have never seen before,” Greenspan said in an interview today on Bloomberg Television. “I’m very much concerned about the fiscal situation,” said Greenspan, 84, who headed the central bank from 1987 to 2006. An increase in long-term interest rates “will make the housing recovery very difficult to implement and put a dampening on capital investment as well.” Rising rates cause companies to pay more to borrow. This effectively will cut off the greatest corporate borrowing spree we’ve seen in decades. Less capital, less growth. If rates rise, that draws people out of their stock positions as debt looks more and more attractive for the higher yields. The miners who had the longest careers were the ones who paid attention to the canary. Don’t ignore it. CommentsLeave a Reply | FREE SUBSCRIPTION!Receive Emailed Articles as they are Posted. Click Below on RSS Feed!Jason's Thoughts!My goal is to use this format to bring important and timely ideas to the surface on recent events which I feel will affect all of us financially. ArchivesAugust 2011 Categories |
RSS Feed