Interest Rates

I like pictures because you can tell a story with them a lot quicker than with the pen {or in the modern world, the keystroke}.  In that vein I present to you a few pictures regarding interest rates. Both of these come to us again from Mr. Charlie Bilello's twitter feed.  The first is showing the dramatic rise in interest rates in the past year.  The one-year US treasury yield is now the highest its been in the last nine years.

The next chart is showing us that US interest rates are on the cusp of breaking out of their multi-generational decline.  A break out from these levels would be unprecedented and lead many to conclude that the path for interest rates is higher for longer.

This is something that bears watching.  Higher rates make business more expensive in everything from borrowing costs for business to unfortunately higher mortgage rates.  Higher rates also have the potential to at some point become competition for investors money.  That day I think is still a ways off and we probably have to see longer-term rates in the 3-4% range before many investors take notice.

These charts are telling you that rates have a much higher probability of rising over the next year.  If you think you might need to borrow money at some point then it's likely best to lock that in as soon as possible.