{"id":520613,"date":"2010-04-08T08:45:00","date_gmt":"2010-04-08T12:45:00","guid":{"rendered":"http:\/\/www.businessinsider.com\/paul-volcker-30-year-yield-break-out-inflation-2010-4"},"modified":"2010-04-08T08:45:00","modified_gmt":"2010-04-08T12:45:00","slug":"the-volcker-trend-just-died-thanks-to-the-30-year-yield-break-out","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/520613","title":{"rendered":"The Volcker Trend Just Died Thanks To The 30-Year Yield Break-Out"},"content":{"rendered":"

\"Chart\"<\/p>\n

How can you tell that nobody of economic influence cares about what former federal reserve chairman Paul Volcker has to say anymore?<\/p>\n

Some say by the fact that the 30-year treasury yield is breaking out of a long-term downtrend, previously established under Volcker’s tenure when he beat down inflationary expectations in the U.S. government bond market.<\/p>\n

Buttonwood:<\/a><\/p>\n

Kit Juckes of the Ecu group points out that the yield on the 30-year treasury bond yield has moved above its 100-month average. This average has been trending down since the mid-1980s so this is quite a moment<\/strong> (as of last night’s close, the yield was 4.84% and the average was 4.71%).<\/p>\n

Buttonwood argues that this 30-year break-out could be the result of fact that inflation-fighting, well-established since Volcker, has taken a back seat to stimulating the economy and preventing the financial system from collapsing.<\/p>\n

Perhaps, but let’s not forget that even inflation expectations<\/em> are still low in the market as proven by looking at inflation protected securities vs. plain vanilla ones<\/a>. (Just to be clear, Buttonwood acknowledged that inflation was currently low right now, so we’re not saying they missed this. We’re just saying that it makes a huge argument against the concept of inflation concerns sending up yields right now.)<\/p>\n

We’d actually be happy to seee the 30-year yield keep rising, and anyone who has berated ‘easy money’ should agree.<\/p>\n

You can’t be complaining about a market fueled with cheap money while at the same time crying wolf when treasury yields are rising from historically depressed levels<\/strong><\/span>… especially if both current inflation and inflation expectations in the market are pretty low, as they are.<\/p>\n

So if the 30-year yield heads back to 6%, on a benign inflation outlook, it would actually be a good thing since it’s just the cost of money moving away from historically depressed levels.<\/p>\n

Yet, of course, if the yield spikes due to an explosion of inflation expectations, then that would be an entirely different story. But that’s not the case right now.<\/p>\n

Join the conversation about this story »<\/a><\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

How can you tell that nobody of economic influence cares about what former federal reserve chairman Paul Volcker has to say anymore? Some say by the fact that the 30-year treasury yield is breaking out of a long-term downtrend, previously established under Volcker’s tenure when he beat down inflationary expectations in the U.S. government bond […]<\/p>\n","protected":false},"author":6205,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-520613","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/520613","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/6205"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=520613"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/520613\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=520613"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=520613"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=520613"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}