December 7th – A Rate Move Which Will Live In Infamy

CNBC puts an interesting spin on the stock market sell-off and reversal in almost all commodities today, blaming the SEC insider trading probe.  We have a different view, believing it was the historic rise in long-term rates.

Today’s 23 bps (at the time of writing) increase in the 10-year Treasury rate was historic.  There have been only 62 days since 1962 where the 10-year rate has increased by 23 basis points.

On a percentage basis — today’s 23 bps change over yesterday’s base rate of 2.94% — the 10-year rate was up 7.82 percent.  There have only been 2 days since 1962 where the 10-year rate has moved 7.82 percent — January 2, 2009 and September 19, 2008.  Note, all three days, including today, were off historically low base rates with 2 percent handles.

What is the rate spike signaling?   Growth revision?  Change in inflation expectations?  Credit concerns over budget and tax deal?  Technicals?   Noise?   All of the above?  Hard to decipher.  Keep it on your radar!


This entry was posted in Black Swan Watch, Bonds, Budget Deficit, Charts, Commodities, Credit, Crude Oil, Economics, Equities, Fiscal Policy, Gold, Politics, Sovereign Risk and tagged , , . Bookmark the permalink.

3 Responses to December 7th – A Rate Move Which Will Live In Infamy

  1. David Jones says:

    Perhaps it is no more than Macbeth’s “tale told by an idiot, full of sound and fury, signifying nothing.” Never the less, my son’s mortgage, not yet even applied for, may get caught in the onslaught as rates creep up “in this petty pace from day to day.”

  2. Pingback: Global Interest Rate Spike: Young Lady or Old Hag? | Global Macro Monitor

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.