Losing Interest

“An Investment in knowledge pays the best interest.” – Benjamin Franklin

In all his wisdom and imagination, I’ll bet Ben probably never imagined this play on words would apply literally to global bond markets.

This past Wednesday Janet Yellen chose again not to raise the Federal Funds rate in what has become a rather uneventful Fed tightening cycle. We talked previously about the restraint low and negative global interest rates could have on holding back our own rate progression and that pattern seems to be playing out so far. Earlier this month our effective interest rate for the 10-year treasury hit a historic all-time low of 1.366% according to Yahoo finance. It has popped back up a little bit since, but we’re still about 33% lower than where we started the year.

The press we see in the financial world seems to be accepting their fate that this kind of environment may last a good while. Oppenheimer funds put up an interesting piece about secular stagnation on their website that reiterates some of the forces we’ve mentioned contributing to the global interest rate situation. †

The minute everyone agrees on this though it will probably change. We just keep looking for opportunities anywhere we can see them and look for managers that can invest right through all of these trends we can’t control.


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