Rebel Capitalist News WARNING: Yields Are Signaling Something Big
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May 15, 2025 Rising bond yields may actually point to economic growth, not decline. The podcast challenges the conventional wisdom that lower interest rates foster prosperity, presenting historical data to back this claim. It delves into the implications of flat and inverted yield curves, highlighting increasing treasury demand amid economic uncertainty. Listeners are encouraged to rethink their portfolio strategies in light of these evolving market dynamics.
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Yields Show Growth Expectations
- The 10-year treasury yield reflects growth and inflation expectations, not just demand issues. - Current yields being close to Fed funds rate contradicts the claim of "no demand" for treasuries.
Yields Track Nominal GDP History
- The 10-year treasury yield historically tracks nominal GDP growth closely. - If yields substantially exceed nominal GDP growth for years, that indicates true demand problems.
Growth Drives Interest Rates Up
- Low interest rates signify low growth, not the other way around. - High growth causes higher interest rates, contrary to popular belief that lower rates stimulate growth.