A commonly stated remark over the past 10 years has been “rates have nowhere to go but up.”Of course, this has been wildly incorrect every time it’s been said.
We first ran this feature in June when the 10-year U.S. Treasury Yield fell to a record low 1.4670 per cent.
Earlier today, we saw the yield fall to 1.3790 per cent.
So, without further ado…
'CMO -- Collateralized Mortgage Obligation. This is a derivative product that masses together mortgages and goes up and down in unison with them. Therefore, it can be very exposed to interest-rate risk. Some REITs, called Mortgage REITs, invest their entire portfolio in CMOs. Other REIT mutual funds will buy some CMOs to supercharge their portfolio. But remember that there's a lot of risk involved with them, especially when interest rates have nowhere to go but up.'
10 year yield in November, 2002: 3.852
'China spends nearly $8 million an hour... or almost $200 million a day... snapping up US Treasury notes and our dollars. Mainland china's top leaders are at this moment are now holding the U.S. hostage to over $150 billion in U.S. Dollars and other American treasuries!
What that means is that U.S. interest rates have nowhere to go but up... and means the U.S. dollar has nowhere to go but down.'
10 year yield in February, 2004: 4.089
'In this book, I hope to give you an idea of the broad trends that will be evident for the remainder of the decade and help you target your investments to take advantage of these trends. Successful investing for the period 2004 through 2010 will require you to do things differently than you did in the 1980s and 1990s. We started the last bull market with high interest rates, very high inflation, and low stock market valuations. All the elements were in place to launch the greatest bull market in history.
Now we're in the opposite environment. The stock market has high valuations, interest rates have nowhere to go but up, the dollar is dropping, and the twin deficits of trade imbalance and government debt stare us in the face.'
10 year yield in April, 2004: 4.197
'The boost in the federal funds rate on overnight loans is widely expected to be the start of a long trend of rate hikes. To be sure, the Fed has raised rates in the past. Indeed, a series of hikes in the mid-1990s temporarily sent the global bond markets into a free-fall. But yesterday's increase is clearly different. That's because, after hitting an historic low of 1 per cent, short-term interest rates have nowhere to go but up.'
10 year yield in July, 2004: 4.466
This one is a bit trickier than the others. Author Kristen Dow ney uses the phrase, but Dean Baker goes even further to say that he doesn't know anyone who thinks rates will come down. Let's credit them both for saying it in this one.
'Many economists think rates have nowhere to go but up, which could leave homeowners with higher payments in the future.
'I don't know anyone who thinks rates will come down,' said economist Dean Baker, co-director of the District-based centre for Economic and Policy Research. 'Almost everybody expects rates in three or four years to be much higher than they are today. People who are professionals are systematically mis advising people. They want to make the deal.'
10 year yield in June, 2005: 4.047
The title of Schwartz's article is 'Interest Rates Have Nowhere to Go but Up'
In the same article, Christopher Mayer, a professor of economics and finance at Columbia Business School said that 'mortgage rates are unlikely to go lower than they are now.'
10 year yield in April, 2010: 2.926
'Bond investors beware: Fear is high that an inevitable increase in interest rates will spell doom for bond returns, eroding income from an increasingly popular source of savings. It's a timely concern: Investors seeking refuge from stock market volatility have poured more than $500 billion into bond mutual funds and exchange-traded funds over the past 18 months.
Bonds may soon become less popular because interest rates have nowhere to go but up. The Federal Reserve has been holding rates near zero since December 2008 to encourage spending and lift the economy out of recession.'
10 year yield in June, 2010: 3.216
'Right now, interest rates are at all-time lows and so, if interest rates can only go up, you want to be in something that floats. This fund holds at least 80% floating rate loans, so it is perhaps the best way to benefit in a rising-rate environment.'
10 year yield in May, 2011: 3.157
'NYSE short interest for the week ended June 15 was the highest in 2011, at 13.5 billion shares, a jump of 333 million share in two weeks, which certainly persisted into the second half of the month, just in time for the market to realise that with QE2 ending, and nobody left to buy bonds, rates have nowhere to go but up.'
10 year yield in July, 2011: 3.016
'Short-term interest rates have nowhere to go but up, which is typically a difficult environment for securities lending. The yield on cash reinvestment vehicles responds to any move by the Federal Reserve with a lag, which makes it hard for lenders to beat the benchmark overnight rate until lower-yielding instruments roll off the books.'
10 year yield in October, 2011: 2.068
''We started the year with a 10-year yield of 3.30 per cent and a nearly unanimous view that interest rates had nowhere to go but up. It looks like we will close the year with a 10-year yield in the neighbourhood of 1.88 per cent and, a nearly unanimous view that interest rates have nowhere to go but up,' said Kevin Giddis, president of fixed income capital markets at Morgan Keegan in Memphis, Tennessee.'
10 year yield in December, 2011: 2.052
'The Federal Reserve has promised to keep interest rates at zero into 2013. While it is possible that the Fed could continue the madness for even longer, the reality is that interest rates have nowhere to go but up.'
10 year yield in December, 2011: 2.052
In an interview with the Gold Standard, Bud Conrad, who owns a degree from Yale and an MBA from Harvard, stated that 'interest rates have nowhere to go but up.' This interview took place last month.
10 year yield in April, 2012: 2.284
Here is economist Marc Faber predicting that rates will go higher in the next few years.
'I would take the U.S. because they can print themselves out. I would not take them as a good investment because I think you have today a yield on the 10-Year of around 1.7% and on the 30-Year around 3%. I think eventually in the next few years yields will be much higher the purchasing power of the dollar will have depreciated significantly. You give me the choice between Spanish, Italian, and U.S. bonds and I take U.S. bonds, but otherwise, if you give me the choice of assets of real estate, equities, bonds, precious metals, I would rather take precious metals than equities.'
10 year yield in January, 2012: 1.960
'Once again I'm going to again step out on a limb and predict this time that fixed income and interest rates will soon dominate investor attention just as foreign exchange has over the half past decade. Fueling the interest will be the end of the near 30-year bull market in U.S. Treasuries, whose yields have actually risen since the Fed's most recent January promise to keep them low through 2014.'
10 year yield in October, 2010: 2.005
'The bottom line is Treasuries at current levels are exceptionally overvalued. As the U.S. economy continues to heat up, I think we will likely see a negative total return for Treasury securities this year. To put that in perspective, Treasuries have gone negative only three times in the past 38 years: 1994, 1999 and 2009. It doesn't happen very often, but given the low current yield, the likelihood for price depreciation is high. It is time to short long-dated Treasury securities, something many of my colleagues in the fixed-income world are loathe to recommend given the huge losses taken over the past 12 months by those who failed to recognise the determination and ability of the Fed to lower the term structure of interest rates.'
10 year yield in March, 2012: 3.116
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