Economist Predicts US Interest Rates To Explode To 3.75% This Year

The NYT’s Binyamin Appelbaum takes a tour through the mysterious world of ultra-low interest rates, observing, for example, that the US government had the same interest payment outlays in 2011 as it did in 2006, despite the fact that the national debt had doubled during this time.

The article also explains how bond investors are basically paying the US government for the privilege of lending to it.

And of course, the tone is: Well it’s only a matter of when, not if, bond yields rocket at some point. He even uses the word “bubble” to describe what’s happening in Treasuries.

This part  at the end shocked us:

John Ryding, chief economist at RDQ Economics in New York, expects rates on 10-year Treasuries to reach 3.75 per cent this year, up from about 2 per cent now, as investors awaken from what he described as “extreme risk aversion.”

But he added that he didn’t understand why rates had remained low for this long.

“I have to say that it’s a bit of an enigma,” Mr. Ryding said. “It’s a conundrum.”

That would be quite the shock to almost everyone if it turns out true.

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