Archive - April 22, 2014

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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