Globalization. Unless you’re a plumber or a hair dresser, there’s someone somewhere that can do your job for a quarter of the price and wouldn’t dare to ask for a raise.
bump. with momentum supposedly building in the economy, why are rates trending down for the year?
Interesting piece on BBG this morning about this.
Bottom line: Lack of wage growth.
Geopolitical issues and relatively attractive yields compared to Europe.
Well, people had always forecasted that the economy would be growing this year. So an increase in rates was probably reflected in the 10y rate from last year. Here are a few things that might have influenced the rate decrease:
-
Janet Yellen was appointed as Chairman.
-
The Fed doesn’t think growth is robust enough; the previous rates forecast would have accounted for different Fed scenarios at this point in time.
-
The Fed keeps changing the signal for rates to increase; it was 6.5% unemployment before. Now it is more general economic numbers.
-
Europe and other regions are in quantitative easing, which drives down US yields.
-
Geopolitical risks are causing people to bid up US Treasuries.
[quote=“villnius”]
You are in a position where you have to buy a significant amount of developed sovereign debt. What would you rather own: US 10-year at 2.5% or France 10-year at 1.5% (along with their associated currencies)? Portugal is at 3.8%…worth the risk?
^is “sit this one out” an option? I don’t know the ins & outs of the sovereign debt market, but i think this type of phenomenon is happening across asset classes and i think it is ultimately not good. in my market i have two choices: (1) underwrite realistically and accept that i won’t hit my return hurdle, or (2) wait for the next recession to clear the deck. (2) ain’t really an option for anyone who doesn’t want to put themselves out of business.
we’re right back where we were leading up to 2007 - asset inflation with no real growth underpinning performance, buckle up.
- the threat of disinflation that can lead to deflation. (especially with government deleveraging for years (decades?) to come).
Dude National Review, Breitbart? All these article do is further convince me that there is in fact a need for employees with STEM backgrounds.
now we’re flirting with 2.0 just before liftoff. i do believe we’re fooked, expecially those who haven’t yet shared in the “growth” produced by this last cycle.