A look at the yield on the 10 Year US Government Bond, and where we think it is going. We look at technical support and resistance levels and provide our thoughts on where we see interest rates moving to in the future. Additionally we
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Regular readers of the Sterling Weekly will recall that I have been voicing my concerns about the Fed’s manipulation of interest rates to abnormally low levels for quite some time. I have expressed my concerns that this is inflationary in nature, and that as a result we could see interest rates rise to levels not seen since the mid to late 1990’s when the 30-Year Bond yielded approximately 7.5%. (Sterling Weekly for September 26th, 2011) I thought it would be a good idea to take a look how an increase in interest rates would affect the price of current government bonds.
As of last Friday March 2nd, the US Government 5-Year Bonds was yielding approximately 0.85%, the 10-Year Bond was yielding approximately 1.99%, and 30-Year Bond was yielding approximately 3.14%. I have said for a very long time that I believe these bond yields are artificially low due to their manipulation by the Federal Reserve. I think that this is causing a bubble in the bond market that could have very disastrous consequence when it finally bursts, as all bubble ultimately do.
I think that it is very realistic to expect that we will see the price of US Government bonds return to their pre-2008 levels at some point in the reasonable future, by this I mean interest rate levels seen…..