Archive - April 22, 2014

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Are Treasury Rates Too High?

Are Treasury Rates Too High?

Rob Arnott was quoted in on April 19 issue of Barron’s where said that the growth rates of 3% in 1945-1970 were a historical oddity due to demographics of rising population, etc.  He said real GDP is now 2% and will go to 1%. The implication is that, assuming inflation remains low, the current pricing for the 10 year Treasury with a yield of 2.7% is fair. Historically the 10 year Treasury yields the nominal GDP, so if real GDP is 1% and in the future inflation is 1.5% then the current yield is legitimate. Van Hoisington said last week …

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