Treasury yields at 2-year high; Global yields rise
NEW YORK (MarketWatch) — Treasury prices sank Thursday, sending the 10-year Treasury note 10_YEAR +2.04% yield to its highest level since July 2011 as it continues its steady march toward 3%. The 10-year note was up 5 basis points at 2.951% while the 5-year note5_YEAR +4.74% yield was up 7 basis points at 1.819% and the 30-year bond 30_YEAR +1.24%yield was up 3.5 basis points to 3.835%. Meanwhile, the 10-year German government bond BX:TMBMKDE-10Y +3.86% yield climbed 8.5 basis points to 2.019%, its first move above 2% since early 2012, according to Tradeweb. The 10-year United Kingdom bondBX:TMBMKGB-10Y +2.72% yield climbed 8.5 basis points to 2.958%.
Interest Rates Are On The Rise This Morning
And US 10-year rates are up to 2.95%, which is a new high for the recent cycle.
So on $17 trillion in debt we pay
@ 1.5% $255 billion
@2.5% $425 billion
@3.5% $595 billion
@5% $850 billion
3% is a very good possibility today, or at least very close to it! What it means is the cost of the US borrowing money is escalating out of control to the point where we cannot legitimately repay it- it is a mathematical impossibility! We cant even afford the debt service on current borrowings:
U.S. borrows 46 cents of every dollar it spends
The federal government borrowed 46 cents of every dollar it has spent so far in fiscal 2013, which began Oct. 1, according to the latest data the Congressional Budget Office released Friday.
The government notched a $172 billion deficit in November, and is already nearly $300 billion in the hole through the first two months of fiscal year 2013, underscoring just how deep the government’s budget problems are as lawmakers try to negotiate a year-end deal to avoid a budgetary “fiscal cliff.”
Read more: http://www.washingtontimes.com/news/2012/dec/7/government-borrows-46-cents-every-dollar-it-spends/#ixzz2e0zgGzRz
Get ready folks…we don’t have long!
Get ready for a ‘massive interest rate shock’ soon
If the free market were allowed to set interest rates and not held down by the promise of endless Fed manipulation, borrowing costs would be close to 7 percent on the 10-year note. Let’s face it, the only reason why anyone would loan money to the U.S. government at these levels is because of a belief that our central bank would be there to consistently push prices up and yields down after their purchases were made.
Our central bank has now adopted an entirely new paradigm.
The Most Important Number In The Entire U.S. Economy
There is one vitally important number that everyone needs to be watching right now, and it doesn’t have anything to do with unemployment, inflation or housing. If this number gets too high, it will collapse the entire U.S. financial system. The number that I am talking about is the yield on 10 year U.S. Treasuries. When that number goes up, long-term interest rates all across the financial system start increasing. When long-term interest rates rise, it becomes more expensive for the federal government to borrow money, it becomes more expensive for state and local governments to borrow money, existing bonds lose value and bond investors lose a lot of money, mortgage rates go up and monthly payments on new mortgages rise, and interest rates throughout the entire economy go up and this causes economic activity to slow down. On top of everything else, there are more than 440 trillion dollars worth of interest rate derivatives sitting out there, and rapidly rising interest rates could cause that gigantic time bomb to go off and implode our entire financial system. We are living in the midst of the greatest debt bubble in the history of the world, and the only way that the game can continue is for interest rates to stay super low. Unfortunately, the yield on 10 year U.S. Treasuries has started to rise, and many experts are projecting that it is going to continue to rise.
Why Another Great Real Estate Crash Is Coming
There are very few segments of the U.S. economy that are more heavily affected by interest rates than the real estate market is. When mortgage rates reached all-time low levels late last year, it fueled a little “mini-bubble” in housing which was greatly celebrated by the mainstream media. Unfortunately, the tide is now turning. Interest rates are starting to move up steadily, even though the Federal Reserve has been trying very hard to keep that from happening. A few weeks ago, when Federal Reserve Chairman Ben Bernanke suggested that the Fed may start to “taper” the rate of quantitative easing eventually, the bond market had a conniption and the yield on 10 year U.S. Treasuries shot up dramatically. In an attempt to calm the market, the Fed stopped all talk of a “taper” and that helped settle things down for a brief period of time. But now the yield on 10 year U.S. Treasuries is starting to rise aggressively again. Today it closed at 2.71 percent, and many analysts believe that it will go much higher. This is important for the housing market, because mortgage rates tend to follow the yield on 10 year U.S. Treasuries. And if mortgage rates keep rising like this, another great real estate crash is inevitable.