from Bloomberg:
Like clockwork, the alarm bells are going off as long-term Treasury yields start their inevitable climb.
“Rising Government Bond Yields Frustrate Central Banks,” trumpets yesterday’s Wall Street Journal.
“Rising bond yields present fresh Fed challenge,” according to the April 29 edition of the Financial Times.
It’s a funny thing about long-term interest rates. They’re pro-cyclical. They tend to rise when the economy is doing well, when demand for credit is strong. They fall when the economy is in the tank, and the private sector isn’t much interested in investing and spending.
If there’s a way to accommodate the increased demand for credit that goes hand in hand with recovery without pushing up the price, no one has figured it out just yet.
