Predicting Inflation and Interest Rates is Hard

By on June 30, 2010

Matt Phillips at The Wall Street Journal exposes the truth regarding economists and the majority of pundits. Very few foresaw the decline in interest rates coming.

Facts. They’re so inconvenient.

Especially for those out there who have been screaming that U.S. was on the verge of a Weimar Republic/Zimbabwe style hyper inflation due to the unconventional approaches — money printing, basically — that the Fed engaged in to try to jolt the economy back to life after the financial crisis.

To wit, look at the 10-year yield, below 3.00% Tuesday morning. Proof positive that inflation is not even near being a worry for the markets at the moment. (Inflation is the main enemy of bond investors as it eats into their return over time.)

Source: The Wall Street Journal
***

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>