10-year Treasury yields close in on 3%

Marketwatch.com ^ | September 5, 2013 | Ben Eisen

[Mr. Jeeves]

Those who are retired are spending principal...

...and they have to just to maintain the lifestyle they had before 2008. And it's not just retired people who are doing this - the middle class is slowly draining its savings to stay even.

This is the single most salient economic fact of the last five years, and it doesn't get the attention it deserves. Everybody who looks around and thinks, "Hey, the economy looks OK, now!" - well, this ongoing consumption of principal is the reason.

[old and tired]

Cramer told his viewers in February of 2000 to buy and hold a bunch of dot.com and tech companies, most of which began to crash the following month.

He also told people to buy JCPenney when Ron Johnson took over. The guy is wrong as much as he's right. He just shouts and seems completely unaware of his lousy batting average so people believe him.

[krunkygirl]

bump and save

[jjsheridan5]

So tell me where this low interest rate economy has helped us.

It hasn't. It is theft, and is destroying the middle class. What is worse, is that by not allowing prices to fall, we are only delaying the inevitable, and the inevitable will be worse because of the delay. To use a drug analogy, we are no longer getting any kind of high, but we cannot face the consequences of stopping. So we put of a day of reckoning that only gets worse.

[Deo volente]

We also have a lot of 62-year olds retiring early and taking their reduced-by-25% social security benefits because they were laid off or can’t find decent work. Some of the reduction in the labor force is due to these early retirees.

[grania]

Remember a few decades back when the economy was faltering, every taxpayer was sent a check for a few hundred dollars and asked to just spend it to help the eonomy? It wasn't a bad idea, compared to the "brilliance" of what we're getting now. That's money spent mostly locally, and it can really help the eonomy.

If seniors got 4% interest on their savings, it would be almost 100% spent, and would have a great positive effect on the local economy with the multiplier effect.

The other thing is wages for low-income workers. $15 an hour is out of line, sure, even for those who survive on those salaries. But if they got some wage increase, instead of the out-of-whack profits going to the owners and CEOs, it would help the economy. Every dollar those low-income workers got would be spent, mostly locally.

[Mr. K]

it hasn’t helped us, although it should have spurred a housing rise.

That’s the whole point- Obama has screwed us over every which way it is possible

[Pamlico]

Mortgage companies are laying off because volume is down. That is a fact. The government statistics on the economy are fiction.

[Mr. K]

How can anyone watch that Cramer guy- and TAKE IT SERIOUSLY

It is like Jerry Springer of the stock market

[grania]

What a shame nobody studies chaos theory anymore. The fed is manipulating the normal ebb and flow of things (sine curve) and as with the housing market, when it unravels and the artificial controls no longer work, it goes asymptopical.

[oh8eleven]

We also have a lot of 62-year olds retiring early and taking their reduced-by-25% social security benefits because they were laid off or can’t find decent work.
Some of the reduction in the labor force is due to these early retirees.
Describes me, to a tee. Got laid off in 2007 and was on unemployment for 99 weeks. Then started early SS and never looked back.

[old and tired]

the middle class is slowly draining its savings to stay even. This is the single most salient economic fact of the last five years, and it doesn't get the attention it deserves.

You're right. Everytime I hear some financial guru talk about the Recession in the past tense, I cringe. I'm old (and tired!) and I can say without hesitation that this is the worst economy of my lifetime - I was born as we were coming out of the Depression.

The 70's (the Carter years) were bad, but if you were willing to hustle you were working. I felt like most of the long term unemployed back then were actually dead weight companies were glad to be rid of. These days I know lots of long term underemployed whom I know to be excellent workers. Most of them are in their 50's. Many are in their 20's.

We feel very fortunate that our adult children haven't been impacted by long term unemployment BUT there's no question that several of them are very unhappy in their current positions but the opportunity to switch just isn't there.

[Attention Surplus Disorder]

Bond rates are not that easy to understand. Without trying to explain the full panoply of implications, when rates recently moved from (picking an arbitrary point) 2% to (now) 2.9%, money became about 45% more expensive. Where (among other places) this has profound implications is in the area of leverage. The question one has to ask is, for most of "our" lives, we have seen rates fall...from the double digit rates of the late 70's and 80's...to the unbelievably low levels produced by QE and the other central bank reactions to the financial crisis of 2008. Those rates falling has INCREASED leverage throughout the system...from real estate, to financial assets, to the cost of college education. FOR THIRTY YEARS. And so, one must ask, are we "done" with the financial crisis and entering a secular period in which rates will rise to their nominal, normal levels? Which are probably in the area of 5-7%. This is the question of the age. What happens if money gets 200 or 300% more expensive? Certainly, there will be a heck of a lot less of it sloshing around the system, making hinky real estate deals infeasible, making stocks less attractive...and making gold/silver (of which I own plenty) far less valuable. And there will probably be less economic activity, because fewer economic activities will generate sufficient profits so fewer people will want to invest in them. This is DEflation. It's hard to predict what will happen; so few can do it and I include myself. I can tell you that rising rates would make the US debt unsustainable all that much faster.

[Red White and Blue patriot]

What’s so special about 4%?

[CGASMIA68]

whada bout retirees and elderly savers that use CD’s for income?

[jjsheridan5]

What a shame nobody studies chaos theory anymore. The fed is manipulating the normal ebb and flow of things (sine curve) and as with the housing market, when it unravels and the artificial controls no longer work, it goes asymptopical.

But this time it is different. We have really smart guys in charge, and they have lots and lots of charts. Their computer models are infallible, and how can something as dumb as the bond market compete with the sheer number of PhD certificates they have on the wall. Chaotic systems are a thing of the past, and Bernanke can tame them with one very visible hand tied behind his back (invisible hands mean nothing anymore).

[ozzymandus]

Oooohhh, 3%!! Maybe I’ll get more than 1% interest on my CDs. I wonder why savers are punished in this country.

[Wurlitzer]

While I appreciate the chart I see way too many that distort the data by not using “0” as a base line reference.

I agree the increase is significant but not as significant as charts like this depict.

[jjsheridan5]

After patting themselves on the back in one of the most embarrassing displays I have ever seen (where Liesman makes a call that looked right for about an hour, only to be spectacularly wrong by the end of the day), the clown that is Cramer assured us that we would see 2.65 well before we would see 3.00 on the 10 year, dismissing the notion that rates could rise. But they will. And, IMHO, there isn’t going to be much resistance at 3.

And, Cramer was wrong. 3% 10 year.

[Bloody Sam Roberts]

Their rates were locked in when the purchased the CD most likely.