Alright, if the title did not scare you off… hope not, we wanted to review the current state of interest rates, with some helpful (in our humble opinion IMHO) comments !
Here we go!
Deep Dive on Interest Rates
First up the US 1 Year Treasury
Think of this as your checking account interest with a little extra earnings … hence the one year time frame.
Seems long ago with all the worlds events, but not too long ago we were in the mid 2% range, currently at .12% ….
Many say we will be in this lower range for a long time, short sighted in our minds, but time will tell!
Next up the US 10 Year Treasury
Think of this as our proxy for mortgage rates, long term inflation and general economic growth expectations.
Not so long ago, in the mid 2% zone looking like we were headed to 3% … today .64%.
Many of the same folks saying we will be here for a long time. We will see!
10 Year Treasury Versus 90 Day Treasury – The Recession Predictor
Not sure if it was luck or just prophetic markets, but when this chart drops below zero (AKA Yield curve inverts) frequently a slowdown comes !
Inversion much of 2019 and then again during the early stages of the lock down.
Take special note of the spike in late March… recall that was when investors tossed their “safe” fixed income investments out the door because they had not other assets they wanted to sell … after the initial spike, normalcy returned.
US versus UK One Year Rates
Thought this was very interesting ….
This most recent interest rate cycle was shallow compared to historical norms, notice how the UK rates were even more shallow.
Many other countries could be inserted here as well with the same result
There you have it, a deep dive on domestic interest rates, yield curves and international comparisons….
Last Friday a new “Block Editor” was forced upon us … think of it as a makeover for all publishing/editing tools on our blog – initially HATED it….but upon further review we are getting used to it and hope you like some of the new fancy features – Like the Big A to start the post!
Have a Great “Deep Dive Interest Rates” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents
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Continued Improvement in the US Economy … Monthly BLS Employment Report .. Unemployment Rate, Interest Rate Reaction
On Friday, August 6, 2021 the BLS (Bureau of Labor Statistics) released the prior monthly (July 2021) employment related report. It is worth noting these are preliminary and will be adjusted in future months, but usually major adjustments are not in the picture….
Bottom Line:
943k hires in the month of July … NICE
5.4% Unemployment Rate as of July …Getting there (lower is better of course)
10 Year Treasuries Took note
BLS Unemployment Report for July 2021
The following Chart from the BLS may look unenthusiastic at first glance….. but hold on!
With the DRAMATIC volatility from the past year, the longer term chart does not give a true recent view…. Let’s look a little closer …. Much Better!
In much the same vein as above, the year view of the Unemployment rate does not look like a big deal as can be seen by the next chart!
On second thought, again with a closer view….. NICE! (We want a downward trending chart when measuring Unemployment)
10 Year Treasuries Wake Up
A measure of future expected growth, after some wrong sided players (shorting the 10 year in expectation of much higher rates faster) blew up pushing yields possibly incorrectly lower….
From Business Insider here
A hedge fund reportedly lost $1.5 billion in a bond market short-squeeze as bets on rising rates turned sour
These Good Economic Numbers put yields on the move higher (far right of chart)!
Continued improvement would likely force the FOMC to slow asset purchases…. as discussed here much desired by many !
Have a Great “Good Economic News” and analysis Monday!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents
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Posted in Economy, FOMC, General Financial Planning, Interest Rates, Investing/Financial Planning, Market Comments, Retirement Planning
Tagged 10 Year Treasury, BLS, FOMC, Interest Rate, Interest Rates, Taper, Unemployment Rate, Unemployment Report