Last Friday, the 10-year Treasury Note closed at a yield of 2.85%. That's up from 2.41% at the end of 2017, but down from the peak of 3.24% on November 8th, and well below where fundamentals suggest yields should be. In the last two years, nominal GDP growth – real GDP growth plus inflation – [...]
The yield spread between the 2-year and 10-year Treasury Note has narrowed to 25 basis points, its smallest spread since 2007. This has many investors worried the narrowing spread will lead to an inversion of the yield curve (when short-term rates exceed long-term rates) – which throughout history has often occurred prior to a recession. [...]
An entire generation of investors has been misled about interest rates: where they come from, what they mean, how they're determined. Lots of this confusion has to do with the role of central banks. Many think central banks, like the Fed, control all interest rates. This isn't true. They can only control short-term rates. It's [...]