10 Yr Yield-100/200 monthly SMA cross is inevitab
The crossing of the 100 SMA ABOVE the 200 SMA on the monthly 10 year yield is inevitable...it will cross shortly no matter what rates do from here on out...even if they declined to 2% tomorrow.
What does this mean...IMO it means longer term lending rates will remain higher than people/corporations are used to seeing over the last 20 years. The prices we are seeing today will more than likely be what we will continue to see over the next 7-10 years; at the very least.
As you can see from the above chart, the 100 SMA crossed BELOW the 200 SMA on the monthly in 1990 and we all know what happened after that cross...we ended up being in a declining interest rate environment from 1984-2020.
We are now in either a longer term increasing interest rate environment or a stagnant one at best.
At this point we know the Fed is "thinking" about lowering short term rates but they are no where near a fierce rate cutting trajectory in the near term. Therefore, in order to project some relatively near term SMA's, I used the "SMA prediction" that vladimir.kamba created to project out the likely path the SMA's may take in the near term. See link below (green lines) for the projected SMA's.
If the past in any indiction of the future...after the cross happened in 1990 rates were never able to touch the 200 SMA until 2018 (28 years later). The 200 SMA has flatted out and is projected to turn slightly up; which it has not done since the 1950's...Woah!!!
The point of this post...get your finances in order to anticipate this new rate environment! Those people or company's that refinanced at really low rates BUT used short term financing must anticipate refinancing those loans at much higher rates and/or should pay them off if possible. Do not count on rates going back to where they were over the last 20 years.
Could we be transitioning back to a period of time where "savers" are rewarded? Could that be why Warren Buffett has dramatically increased the cash pile at Berkshire Hathaway to around 25% of the total portfolio?
What does this mean...IMO it means longer term lending rates will remain higher than people/corporations are used to seeing over the last 20 years. The prices we are seeing today will more than likely be what we will continue to see over the next 7-10 years; at the very least.
As you can see from the above chart, the 100 SMA crossed BELOW the 200 SMA on the monthly in 1990 and we all know what happened after that cross...we ended up being in a declining interest rate environment from 1984-2020.
We are now in either a longer term increasing interest rate environment or a stagnant one at best.
At this point we know the Fed is "thinking" about lowering short term rates but they are no where near a fierce rate cutting trajectory in the near term. Therefore, in order to project some relatively near term SMA's, I used the "SMA prediction" that vladimir.kamba created to project out the likely path the SMA's may take in the near term. See link below (green lines) for the projected SMA's.
If the past in any indiction of the future...after the cross happened in 1990 rates were never able to touch the 200 SMA until 2018 (28 years later). The 200 SMA has flatted out and is projected to turn slightly up; which it has not done since the 1950's...Woah!!!
The point of this post...get your finances in order to anticipate this new rate environment! Those people or company's that refinanced at really low rates BUT used short term financing must anticipate refinancing those loans at much higher rates and/or should pay them off if possible. Do not count on rates going back to where they were over the last 20 years.
Could we be transitioning back to a period of time where "savers" are rewarded? Could that be why Warren Buffett has dramatically increased the cash pile at Berkshire Hathaway to around 25% of the total portfolio?
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