Wednesday, September 7, 2011

Yield Curve Collapse

The yield curve is collapsing. We can see in the above that it is dropping down to record lows. Despite the FEDs free hand with cash the same cash seems to go no where. Again we note that those on a fixed income relying on secure long term debt for payments are facing record "inflation" as the rate drops, while prices continue to rise.

The spread has also collapsed. We have been tracking this for three years now since the current Administration took over and we see the lowest ever in spread. The anticipation is for record low growth.
The details above show further the nature of this spread. The short term Treasury is as near zero as it can be but the 10 years have also collapsed. Good news for debt payment but bad news for long term growth potential.