Market Movements and Father’s Day Reflections
Suddenly, government bonds, previously perceived as dull, have captured newfound interest. Over the past several weeks, a remarkable shift has taken place within the credit market.
Believe it or not, interest rates do not continuously decline; in fact, they can rise unexpectedly.
“In the past six weeks, benchmark 10-year U.S. Treasury note yields have surged from 1.60 percent to 2.19 percent,” reports Reuters.
This shift has resulted in noticeable outflows from bond funds and a lack of demand in Treasury bond auctions. The combination of these outflows and increased volatility serves as a concerning indicator of market behavior as the Federal Reserve begins to retract its extensive monetary stimulus strategies aimed at the U.S. economy.
We predict that as the Fed reduces its interventions, interest rates are likely to increase significantly!
Reaching a New Turning Point
It should be evident that interest rates can increase, yet for individuals under 50, this concept may be foreign, as they’ve experienced a continuous decline throughout their adult lives. The previous three decades established a trend of decreasing rates.
To find contrary evidence, one would have to look further back in history. Individuals living between 1945 and 1982 had a vastly different understanding, having learned that rates rarely decreased and typically rose instead.
Interest rate cycles usually span 25 to 35 years. After peaking in 1920, 10-Year Treasury yields steadily declined until the mid-1940s, only to rise again until 1982. At that point, they began another descent below 2 percent.
It seems we have now arrived at a new turning point.
Having traversed the intricacies of the economic landscape, let’s take a lighter turn and share a humorous anecdote from Father’s Day. Below is a recounting of events from Father’s Day 2009, updated for your enjoyment.
The Culinary Adventure of Rabbit for Dinner
Becoming a father has instilled in us a newfound awareness of just how exhausting and costly this role can be—there are no days off, no discounts—even on Father’s Day. We don’t complain; rather, we appreciate every moment more than we did before.
Last Sunday morning, after reading our Father’s Day card and trying on a new pair of shoes, our wife announced that our in-laws—and several eclectic guests—would be over for a barbecue. This meant we had plenty of chores to tackle quickly.
We edged the lawn, mowed the grass, cleaned the grill, washed the outdoor toys, tested the spa water, took out the trash, and so on. After a brief pause to hydrate, we rushed to the market, spending our hard-earned cash on steaks and accompaniments—almost everything was covered, but our cousin Caesar brought a rabbit marinated in cactus and chili.
“It’s delicious,” Caesar promised, grinning widely despite his missing tooth, likely a souvenir from a scuffle in Mexico City.
However, the potent odor that wafted through the neighborhood as we grilled the rabbit for nearly 40 minutes left us skeptical. As we took our first bite, we held on to the hope that it would taste like chicken. Unfortunately, it did not.
We managed to choke down a few bites before discreetly discarding our plate in the trash when no one was watching.
“Next time, I’ll bring crocodile,” Caesar quipped with a wink.
We can only hope he was joking—and we suspect our neighbors do too.
Sincerely,
MN Gordon
for Economic Prism
