OK, so my life can’t really be described with one line, but here are the month-end ten-year Treasury yields throughout the course of it, plus last night’s closing yield, added by me.
I think this chart is the defining one of the economic world in which I have lived. Of course, the symmetry is amazing, but the rise and fall of interest rates says so much more. Demographics and geopolitics helped shape the path that we see, driving the cycles of inflation, disinflation, and globalization. The democratization of finance and the information revolution are in there too.
In presentations since the mid-1980s, I have asked investor groups, university classes, and others whether interest rates are high or low. A very high percentage of respondents have always said, “Low,” yet rates have kept going lower and lower. Will 2012 finally be the year that they start to move higher once again, or will we just proceed along to zero?
Here’s wishing you many happy total returns in the new year. Thanks for reading. (Chart: Bloomberg terminal.)