10yr rates are suggesting deflation?
The 10yr rate is falling, and falling hard.
What is causing all this buying of the 10yr? Are we heading toward a recession?
The few things I do know are…
1. Global growth is still here. (see the ‘economy’ tag for previous thoughts)
2. The markets are saying soft landing… as are the inflation numbers.
3. The lowering of the yield is a very telling indicator that inflation is not a worry… not at all.
4. The slowdown in the economy may be more severe than anticipated, and a rate cut maybe in the works.
5. The housing markets may be saved, sort-of. (While growth in the sector has obviously halted, the foreclosure rates may be reduced. Refinancing of their ARMs may save a lot of people.)
I’m getting the feeling we (the States) will be living in a low interest rate environment for some time. (that is good for relatively sustained realestate value, and especially the investment banks) But that will change when the Yaun gets a meaningful re-valutation, and inflationary pressure kicks in from the more expensive imports.
